Farm News, IA
12-07-07
Farm News Ag Show draws crowd
Producers urged to plan ahead
By JESSE HELLING, Messenger staff writer
Kelvin Liebold, one of the keynote speakers at the sixth annual Ag News Farm
Show, talks Thursday afternoon to a group of attendees.The photograph on the
screen is an ethanol plant located in China.
Getting a crop out of the field, into the bin and out again costs money.
However, planning ahead can make a difference in profit margins, according to
presenters at the sixth annual Farm News Ag Show.
Ed Kordick, commodity services manager for the Iowa Farm Bureau Federation,
joined Kelvin Liebold, an Iowa State University Extension farm management
specialist, to discuss strategies for post-harvest marketing Thursday morning.
All producers should develop a marketing plan for their crops well before harvest
time, Kordick said.
“A marketing plan is a proactive way to take as much emotion as possible out of
the process,” he said.
Fear and greed are two powerful emotions that can result in producers making
rash decisions that result in lower profits, Kordick said.
Both Kordick and Liebold offered suggestions regarding crop marketing.
To begin with, producers would do better to let market conditions, rather than the
opinions of some “market guru,” influence selling decisions, Kordick said.
“The average farm earns 20 to 30 cents per bushel,” Kordick said. “A 10-cent
increase could increase net income by 33 to 50 percent.”
Harvesting and storing crops in one’s grain bin is the easy part, Kordick said.
“Once it’s in the bin, how do we take it out?” he said.
Through the use of simulations, Kordick and Liebold showed how multiple
variables have large influence on the overall profitability of a crop.
“Look at the long haul and don’t get too excited about hitting home runs in any
particular year,” Liebold said. “You win more points by getting on base than
hitting home runs.”
The temptation to hold onto crops to sell them for higher prices is offset by the
costs incurred in storage fees, said Kordick.
“Exit strategies,” or getting rid of one’s crop, can be tied to price, time or a
combination thereof, Kordick said.
“Think big on the minimum price, but be realistic on the maximum price,” he said.
One of Kordick’s most emphatic advisements is the so-called 11th
commandment of grain marketing — in which producers should have no unpriced
grain left after July 1.
Kordick advised producers to select a post-harvest target price that has at least a
20 to 25 percent chance of occurring.
Exit strategies also depend upon one’s own preference for dealing with risk,
Liebold said.