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A post-long-harvest wrap up

Some marketing advice in the wake of this year’s drawn out nightmare of a harvest

I truly hope that by the time you are reading this your harvest has been completed.

If not, a spring harvest could bring financial challenges that you’ll need to address to ensure your farm doesn’t end up in undue financial stress because of lost income or a deferred, if any, crop insurance payment in spring.

With some of your crop under snow, you could be facing unpaid input bills or be unable to make land or equipment payments.

Crop insurance will defer payments until spring, waiting to see what you will get for bushels before finalizing your claim. If you exceed your bushel coverage threshold after adjustment for grade has been calculated you may not receive any payment from insurance.

Will your cash flow get you through the spring seeding season? Do you have any available line of credit? At times like this it is vital to have accurate financial records so you can evaluate your current situation and determine what steps you need to take to ensure your operation is able to weather a bad harvest year.

Do you have saleable inventory you can market to help meet your cash flow needs for the next 12 months? Should you take a cash advance against your grain to help get you through until the spring? What condition is the grain in that you have in the bin? Do you have the option to hold onto it to price at a later date, or do you need to sell it sooner because of the quality concerns? Do you need to condition it to store it properly?

Do you need to consider refinancing land or machinery? Can you make all your debt payments over the next 12 months?

Some financial institutions such as FCC are already offering special circumstance financing options for producers facing financial hardships because of the delayed harvest. Let your lenders them know your situation and see what they can do to help.

Discussions with accountants, bankers and financial planners would be advisable at times like this. They can help you work through various scenarios to see what would work the best for all parties involved.

If your farm operation is run by a farm family team, you need to get everyone involved is these discussions. Wages, benefits, holidays, equity, debt and profits could all be impacted.

Grain marketing

From a grain marketing perspective there are some things to think about in order to maximize value from your inventory.

First, get each and every bin of grain graded so you know the quality of what you have for sale. Get a grading sheet from each company and ask them what they are willing to offer you for a package deal. Get it in writing so you can compare it against the others.

Knowing the grade and grade factors, moisture, bushel weight, green count for canola and falling number for milling quality wheat will help you make better decisions about how and where you will market your grain.

Ask each company about their grade discounts. Each company likely has a different discount between grade levels. They may all offer you a No. 2 for your wheat but if one company has a $0.20/bu. discount from a No. 1 down to a No. 2 and the other has a $0.35/bu. discount you need to know that, as it will mean a big difference in net return. Spreads can change daily, so before you sign a contract re-confirm the spreads.

Next, find out what current tough and/or damp discounts are for each grain at each company you may deal with, as they could also be different. If any companies offer grain drying ask what those costs would be for the different grains and what levels of moisture they will accept for drying — most have maximum moisture levels they will accept to maximize drying efficiency and reduce their risk of grain going out of condition in their facilities, which can cause major headaches for everyone involved.

Now you can sit down and look at the grade specs for your grain. If you have tough or dame grain you need to decide if you can aerate or dry the grain yourself. Are you set up to move and dry grain easily between bins? How long will it take and what will it cost, compared to taking it to the elevator to have it dried and sold? What will net you the best value for your grain with the least amount of work involved? Most of you don’t fully account for your time or wear and tear on farm equipment —you could end up spending way more time and money drying grain yourself than if you had it done at the elevator.

Review all these numbers then do the math and see what makes the most sense. It’s been a long harvest and you don’t need to work any harder. Work smarter, crunch the numbers, then see what will give you the best return and do it.

About the author

Columnist

Brian Wittal has 30 years of grain industry experience and currently offers market planning and marketing advice to farmers through his company Pro Com Marketing Ltd.

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