“You can't go broke with a black bottom line,” says Vaughn Maudal, who grows soybeans, corn and sugar beets near Wheaton, MN. “We may not hit all of the tops, but we have a good average at selling our crops.”
With the low prices and flat markets of the past three years, it takes only pennies to change the color of ink in a profit-and-loss statement. Selling at an average price that keeps black ink flowing takes more than a little effort.
But Maudal seldom does it himself. Nearly three years ago, he signed a limited power of attorney (POA) that gives Peggy Raisanen the right to sell his crop. As a marketing consultant with Hurley & Associates, Raisanen works through the Wheaton elevator with 75 local producers who crop about 87,000 acres.
“Most of them assign us authority to make marketing transactions in their names,” says Raisanen. “This has been a learning experience for most producers. But we use pretty standard, pretty conservative marketing techniques.”
For example, her clients had about 40% of the 2001 corn crop contracted in November 2000. But Raisanen didn't get in any hurry to forward-sell soybeans. “We aren't looking to contract soybeans until we can set a price above the loan rate,” she adds.
The marketing association Raisanen represents has an interesting history. Its genesis dates back to 1976, when Ida Hurley began bookkeeping in her home for several Midsouth farmers. By 1988, when she founded Hurley & Associates, Ida was merchandising for farmers representing several thousand acres of crops.
The Hurley firm actually consists of two enterprises. One is a commodity brokerage; the other is a cash-merchandising arm. In 1999, Hurley & Associates joined with FC Stone, a commodity futures clearinghouse that represents mostly big, commercial clients, such as elevators and processors.
“That gave us clients all across the Upper Midwest and even in Ontario,” says Hurley. “We still represent agricultural producers. And today, we're marketing the production from more than 600,000 acres.”
While Hurley's client base has expanded considerably, the mission remains the same: To help farmers gain economic stability while maintaining the dignity and value of the family farm.
“We never play fast and loose with a client's grain,” says Ed Case, Hurley senior consultant at Charleston, MO. “However, we may use some marketing vehicles that are a bit out of the ordinary. Right now in this area, we're using hedge to arrive (HTA), because the basis fluctuates wildly here, primarily due to changing barge freight rates. HTA lets us lock in a favorable basis, but we never roll contracts to multiple years.”
The firm charges on a per-acre basis. In areas like Wheaton, where Hurley works through local elevators, the firm and the elevator split the per-acre charge. “That per-acre fee is some of the best money I spend,” says grower Maudal. “I wouldn't go back to trying to market on my own.”
Raisanen says the firm can often group several producers' grain to sell in bigger volumes that earn premiums. “We have to match our ability to market and manage money against Brazil and China and their cheap labor,” she says. “Marketing opportunities are out there, but you need to recognize them and be ready to take advantage of them.”