Side by Side: Marketing software

Agriculture.com Staff 02/13/2006 @ 8:45am

Mike Whitson, Cedar Falls, Iowa, knows instantly if a grain sale is profitable, thanks to My Farm Risk Eliminator software. It's one of three programs that ties production costs to a marketing plan and shows returns as the plan is executed.

Early this year, Mike Whitson was talking on the phone with the grain merchandiser at a co-op in Manly, Iowa. He was considering December 2006 hedge-to-arrive corn contracts. With a few keystrokes at his computer, he knew if it was a good deal, thanks to a software program, My Farm Risk Eliminator.

"This, on the fly, will show you your net profit," he says. The program's current position summary displays a table of returns or losses per acre, depending on prices and yields. You set the range of futures prices and yields.

For corn, a typical display shows prices ranging from $1.80 to $3.70 along the left side of the table. Along the top, yields range from 80 to 200 bushels an acre. The computer has calculated income protection from the crop insurance Whitson has purchased, and it has calculated a break-even price from expenses he's already typed in.

Then with each sale, he can see potential losses displayed as red numbers and gains in black. Depending on the price he gets with each marketing move, the line between red (money-losing returns) and black (profitable ones) shifts back and forth in the table.

This information also displays in a three-dimensional graph, with yields along one axis, futures prices on another, and profit or loss on the third side.

In the photo above, Whitson is looking at the graph. The green portion is profitable; the red is not profitable. Whitson likes the graph for "what-if scenarios," he says. When he's considering a sale, "if the graph becomes more red than green, you know your decision is less advantageous."

Whitson raises corn, soybeans, seed oats, and millet, and he partners with his brother-in-law. Most farmers have a good idea of costs at the start of the year and how they did at the end after calculating taxes, he says. "It's the in-between time when you wonder, 'Gosh, should I sell corn or shouldn't I?' "

No computer program is going to forecast future prices or your yields, but the program's graph will show you if you're increasing your chances of positive income.

Whitson and his farming partner have used My Farm Risk Eliminator for five years. At first they used it mainly to compare different levels and types of crop insurance. In 2002 they used it to decide how to sign up for the new farm program. Now they use it to plan and execute marketing strategies.

The software Whitson bought isn't unique. Grain companies, commodity brokerage firms, and crop insurance companies have similar programs for farmer customers.

Yet, we were able to find only three products sold directly to farmers. Two were developed by farmers. Dave Olsen of Mason City, Iowa, put together My Farm Risk Eliminator. Jeff Helgen, who farms near Litchfield, Illinois, designed SmartFarm. Buy either product, and you'll likely be talking to one of these farmers if you call for support.

The third program, Marketeer, was written at the University of Minnesota's Center for Farm Financial Management. (They wrote the FINPACK financial analysis program.) It's supported by the Center or by Country Hedging, Inc., a full-service brokerage and subsidiary of CHS, Inc. You can use the software and market through Country Hedging, or use it on your own.

All three programs tell you how well your sales are exceeding expenses.

All will report that in revenue per acre and price per unit. Marketeer has a 3-D graph of per-acre revenue that is similar to My Farm Risk Eliminator's but not quite as detailed. SmartFarm has a table similar to Risk Eliminator but not as detailed. Risk Eliminator and SmartFarm calculate your cost per acre. You input that into Marketeer.

All three products get favorable comments from farmers. Burt Loitz of Colona, Illinois, likes the ease of figuring cost of production with SmartFarm, which he has used two years. Comparing breakevens with his marketing results has been "kind of an eye opener," he says. It has prompted him to forward price more of his crops earlier in the year. "I think the days of making cash sales are about over."

Like many users of Marketeer, Jon Gorder views the program at the office of his grain merchandiser, Doug Balvin at Canby Farmer's Grain in Canby, Minnesota, not on the farm. "We set up our marketing plan and stick with it," he says. Gorder and his brother set price goals and meet with Balvin every two weeks to revise them if needed.

You can download a demo of Marketeer and order one of SmartFarm. My Farm Risk Eliminator also has a trial version in its program.

Untitled Document

 

Program/Maker

User comments

Price

Marketeer
University of Minnesota and Country Hedging
Phone: 800/234-1111
Web: www.agriculture.com/go/5881

“We’re selling earlier, and we’re probably selling more grain more aggressively,” Steve Lachey of Larsen Co-op in Larsen, Wisconsin, says of the farmers who use Marketeer at the elevator. Lachey prints out easy-to-read reports for his part-time farming clients. “This tool allows them to market their grain while they’re at work.”

$295
(includes support)

My Farm Risk Eliminator
Intuitive Agritech
Systems, Inc.
Phone: 888/315-8179
Web: www.agriculture.com/go/5882

Mike Whitson of Cedar Falls, Iowa, has compared My Farm Risk Eliminator with another program and found it does more. It may be more complex, too. “It took us a long time to figure out really what we could do with this software,” he says. This program has video tutorials, though, that Whitson has found very useful.

3582$297
(Bronze Edition with
1 year support)
$497
(Silver Edition with
2 years support)

SmartFarm
Farm Logic
Solutions, LLC
Phone: 800/583-5258
Web: www.agriculture.com/go/5883

Steve Barnett of Shipman, Illinois, uses SmartFarm to set living expenses above his cost of production, then he makes sales when prices are above that break-even price. “Every time you make a sale, you put in the sale, and then it tells you the price you’ve got to have for the bushels you have left,” he says.

$400
(includes support)

Mike Whitson, Cedar Falls, Iowa, knows instantly if a grain sale is profitable, thanks to My Farm Risk Eliminator software. It's one of three programs that ties production costs to a marketing plan and shows returns as the plan is executed.

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