New software compares marketing scenarios
Grain producers know they need to do a better job of marketing their crops, but the simple words "puts," "calls" and "options" can create fear and confusion.
"The terminology involved in marketing today just scares us to death," says Dan Brandt, an Eyota, MN, corn and soybean grower. "Ask us to buy or sell a call or put and we get confused and don't want to learn."
Marketeer, a market planning software program, has been developed to help farmers overcome these obstacles and create workable marketing plans. The program is a result of a partnership between the University of Minnesota's Center for Farm Financial Management (CFFM) and Country Hedging, Inc., a subsidiary of Cenex Harvest States.
"Through our risk management meetings with growers and our discussions with Country Hedging, we saw a need for a simple step-by-step computerized approach to developing a marketing plan," notes CFFM director Bob Craven.
"Marketeer allows producers to play `what if' with different price scenarios," says Craven. "They can actually compare returns under their marketing plans vs. returns from just selling at harvest. With the right strategy, Marketeer shows them how to cover themselves in the event that the price of the commodity goes up, so they don't have the fear of missing an income opportunity."
Brandt, who markets 80,000 bu of corn and 20,000 bu of soybeans, used the program last spring.
"I knew if I was going to stay in business, I'd have to learn how to do a better job of marketing," he says.
He previously relied heavily on forward contracts and cash sales for his marketing program. So did Mark Pinney and his brother, Allen, LeSueur, MN. They chose Marketeer when looking for help in developing a marketing plan for their 100,000 bu of corn and 25,000 bu of soybeans.
"We didn't want to turn it over to someone else completely, yet we weren't comfortable doing it ourselves," says Mark.
"The most important aspect of the program was that it forced us to make a written marketing plan," he adds. "We were able to start simple and take it at our own pace as we learned how the marketing tools worked and gained some confidence."
Marketeer generates a "to do" list for contracts, options, anticipated actions and trigger prices. Copies of the list can be left with market advisors, brokers and elevators to catch pricing opportunities.
According to Craven, the program is capable of developing marketing programs for any size operation.
The focus on risk management education moves to the forefront as 2003 and the end of government programs approaches. Craven notes that lenders are beginning to ask producers for marketing plans, in addition to the standard cash flow and financial plans, as a way of managing their risk.
The program is available nationally through CFFM and Country Hedging offices in Wisconsin, Minnesota, North and South Dakota, Montana, Iowa, Nebraska, Kansas and Colorado. It requires a Pentium 180 or better PC running Windows software.
A 10-day free trial can be downloaded from the CFFM Web site (www.cffm.umn.edu), or ordered by calling 800-234-1111 or Country Hedging at 800-378-5056. The cost is $295.