Farmers’ Grain Marketing Practices Vary Little, Study Finds
The latest results from a grain marketing survey conducted by a private firm show similar farmer characteristics that cropped up in Successful Farming’s Benchmarking Marketing survey in 2013.
While the two surveys used different parameters to reach their results, it is interesting to note how they compare when conducted four years apart.
Farmers feel satisfied to mostly satisfied with their grain marketing performance, and larger farmers tend to use more marketing tools than smaller operators. Those were just a few of the survey findings announced this week by Farm Credit Services of America (FCSAmerica), a financial cooperative owned by agricultural producers.
The survey went out to 650 grain producers in nine states throughout the Corn Belt.
At a time when many farmers have worked to lower their operating costs, the survey offers insights about how to optimize the income side of the farm balance sheet, FCSAmerica stated in a press release.
“The survey results highlight that knowing cost of production is the foundation of sound marketing,” said Doug Stark, president and CEO at FCSAmerica, in a press release. “They also highlight the important role that crop insurance plays in supporting both risk management and marketing, not just when there is a crop failure.”
While the FCSAmerica survey found that one third of producers are mostly or completely satisfied with their marketing practices and results, that is lower than the 2013 Successful Farming grain marketing survey that found over three fourths of 1,100 Corn Belt farmers rated their grain marketing performance good-to-excellent.
FCSAmerica’s survey revealed that satisfied marketers are more likely to price as soon as the market offers a profit and to price multiple crop years. They are less likely to sell most of their crop right after harvest or to price based on market fear or cash flow needs, according to the FCSAmerica’s survey results.
Interestingly enough, the 2013 Successful Farming marketing survey highlighted that 33% of farmers’ primary goal in marketing is to manage risk; 20% marketed to enhance price.
Other findings of FCSA’s survey:
– More satisfied than dissatisfied marketers report that they have a good understanding of their cost of production and use it to set an initial price goal. Satisfied marketers are more likely to have written marketing plans.
— On average, producers use four to five marketing tools, the most popular being storage. Also, 82% store grain at least occasionally; one in five always stores.
— Operations of 1,000 or more acres and growers with higher levels of crop insurance employ a fuller range of marketing tools. Producers with revenue protection of at least 80% also are more likely to price prior to harvest.
— More than two thirds use cash forward contracts and spot cash sales; only a quarter of respondents use futures or options.
In 2013, the Successful Farming Grain Marketing Survey results mirrored the FCSAmerica’s survey trends on the use of grain marketing tools. SF’s survey found that 84.1% farmers used cash sales, 47.8% used forward cash contracts, and only 26% used futures contracts.
FCSAmerica’s survey found those 35 and younger are more likely to use hedge-to-arrive contracts and lock in the carry when they store. Younger and larger operators are more likely to use their cost of production to set a marketing price.