OMAHA, NEBRASKA (June 1, 2017) – Farm Credit Services of America (FCSAmerica), a financial cooperative owned by agricultural producers, today announced results of a survey it commissioned on the marketing practices of farmers across the Corn Belt. The results shed light on the practices used by grain producers who say they are satisfied with their marketing results, and offer an opportunity for farmers to compare themselves to their peers and examine their own approach to marketing.
Nearly 650 producers in nine states answered questions about how and when they price their crops. 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.
"The survey results highlight that knowing cost of production is the foundation of sound marketing," said Doug Stark, president and CEO at FCSAmerica. "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."
Among the findings:
- One-third of producers are mostly or completely satisfied with their marketing practices and results.
- 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.
- 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. Eighty-two percent 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 percent also are more likely to price prior to harvest.
- More than two-thirds use cash forward contracts and spot cash sales, while only a quarter of respondents use futures or options.
- 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.
USDA reports on grain sales are focused on deliveries to elevators. The FCSAmerica survey focused directly on producers with 350 acres or more of corn, soybeans and/or wheat to learn how they actually price their grain. The results reveal how farmers view risk, the pricing strategies they employ, and the factors that influence their marketing attitudes and practices.
Ted Schroeder, an agricultural economist and director of the Center for Risk Management Education at Kansas State University, assisted with survey design and interpretation of results.
FCSAmerica provides credit and crop insurance services for more than 50,000 customer-owners in Iowa, Nebraska, South Dakota and Wyoming. "We don't advise producers on their marketing strategies, but as a farmer-owned cooperative, we continually invest in helping our customers enhance their financial acumen to benefit their operations," Stark said.
To view the full survey report, visit fcsamerica.com/GrainMarketingInsights.
About Farm Credit Services of America
Farm Credit Services of America is a customer-owned financial cooperative proud to finance the growth of rural America, including the special needs of young and beginning producers. With more than $26.5 billion in assets and $4.8 billion in members’ equity, FCSAmerica is one of the region’s leading providers of credit and crop insurance services to farmers, ranchers, agribusiness and rural residents in Iowa, Nebraska, South Dakota and Wyoming. Learn more at fcsamerica.com.