Options Marketing Could be Profitable Alternative for Farmers
Mark Gold, with Top third Marketing recently spoke to a group of farmers and interested parties about different ways to market crops. Gold is dedicated to helping farmers realize the highest profit possible from their crops and livestock:
“We know the American farmer is the best producer in the world. But sometimes marketing takes second place to the production side of agriculture. So we want to point out the importance of marketing.
A lot of farmer believe that marketing is about trying to out guess the market. Should I sell my grain today because it is going down tomorrow? We try to explain that marketing is about analyzing the risk and determine the risk you have for the old grain that is in storage but also for the new crop that hasn’t even been put in the ground.
One thing we have found, is that even if the Midwest has 100 degree temperatures and no rain, we can still raise 125 bushels. How big will the yields get if there is a good growing season, there is no telling how good the genetics are today. A lot of producers don’t believe that the price can go under the cost of production, which is a mistake because it can and will go under that cost. There is still the risk of corn going to $3 per bushel, of soybeans going $9 a bushel, wheat to $4.50. What we want to do is access the risk and help famers do a better job of marketing.
Options can be confusing and most who teach it throw all of the technical and complicated mechanics at you and hope you get it. I am suggesting a different approach to what an option is. We try to educate the farmers that its simply an insurance policy in place in case the price of a commodity moves lower until they sell it. So if the prices move down they are protected, if they move up then they lose the money they paid for the insurance policy but have the money from selling at higher prices. We want to teach the farmers how to ride the highs and the lows.”
Mark Gold with Top Third Marketing.