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Grain Marketing Models
Jean-‐Guy Vaillancourt ACORN November 2015
www.homesteaorganics.ca
Homestead Organics
• Who are we/Who am I • What is grain markeHng? • What should you consider when markeHng grains?
• Type of buyers • Method of selling • Market tendency
Who we are • Between OOawa and Cornwall in Eastern Ontario – Started on the family crop farm in 1988 – Split processing from the crop producHon in 1997
• Organic whole grain services – Storage, cleaning for food & feed, markeHng
• Organic livestock feed – Complete grain raHons, bulk and bagged, thru dealers
• Organic farm supplies (seed, supplements, etc) • Support, educaHon, networking
Where do I fit
• I am the grain trader for Homestead Organics. • In charge of buying crops, quality assurance and negoHaHons.
Grain MarkeHng
How to: • Sell grains • Search for prices • Find a contract that suits your needs.
ConsideraHon
• What are you selling? • What is the quality of your product? • When do you want to sell it? – Cash flow, weather, storage capacity
• Where do you want to sell it? • What are the specificaHons to meet for the preferred buyer?
• What is your BACK UP PLAN!
Method of selling
• ContracHng – Pre-‐harvest – Post harvest
• Spot price • InviHng mulHple buyers to visit a group of farmer’s and talk about the prices they will be buying it for.
• Trading
Type of buyers and learn how they work
• AnalyHcal • Driver • Amiable • Expressive
How to personally scan the market for current pricing
• Call mulHple buyers asking for prices. • Search online • Search online for past organic trends prices and expectaHons.
• Talk with some farmer’s in the same situaHon as you and talk about prices.
What is best for you
• Determine when selling is best for you. • Do you like rushing at the last minute to try and sell it at a (stable, beOer, lower) price.
• Do you need a plan by planHng Hme? • Do you need to meet cash flow obligaHons? • Prepare mulHple plans • Do you prefer contracHng at a set stable price? • Do you like speculaHng? • Understand the details in the contract.
When talking money
• Determine the type of transacHon. • Obtain transportaHon quotes if you need to pay for delivery.
• Work around the pick up day. • Payment method and Hmeline • Make sure it feels right to you. • Depends on the buyer (farmer, trader, processor) and their margins.
What’s your general situaHon
• Buyers do not know about you. – And you may not know the buyers.
• Allow $20-‐$70 per tonne in shipping. – Either way – affects market price.
• Know the market pressures – If a local shortage, add $40 as replacement cost – If local surplus, subtract $40 to reach markets.
• Feed market/infrastructure to be developed.
What to do
• Beware of a volaHle market. • On-‐farm storage is the best strategy. • Contract some: – predictable, reliable, profitable, Hmely cash flow.
• Spot some: – speculaHve opportuniHes. – watch your nerves; sHck with your commitments.
• Choose your buyer: – RelaHonships, reliability, compaHbility, paHence.
Grain MarkeHng
• Any quesHons?
Past market trends from Homestead Organics
• Good way to predict the future is looking in the past.
Homestead past market trends
Organic Soybeans past trends
What’s to come
• You can never be to sure. • What is coming up? • What seams to be stable? • What is coming down? – Many more acres coming into organic producHon. – Good organic produciton in eastern Europe & Asia.