Print
A A A |

Grain Marketing Survey: Producer Practices and Attitudes

While many grain producers have adjusted to lower commodity prices by focusing on their cost of production and family living expense, equally important is the income side of the ledger.

To shed some light on grain marketing practices, especially the approaches used by farmers who say they are satisfied with their marketing success, FCSAmerica recently commissioned a survey of more than 600 Corn Belt producers.

Download Grain Marketing Insights

Table of Contents

 
View each section from the grain marketing survey in PDF format:

Introduction

Methodology

How Producers View Risks

Producers' Attitudes About Risk Management Tools

How Producers Market Their Crops

Producers' Attitudes About Futures and Options
How Producers Time Sales

Marketing Hurdles

Marketing Satisfaction

Factors That Affect Marketing

Appendix: Survey Demographics
 

Here are some top-line results:

Marketing Satisfaction

  • One-third of producers are mostly or completely satisfied with their marketing practices and results.
  • More satisfied than dissatisfied producers said they have a written marketing plan, possess a very good understanding of their cost of production, and use it in setting an initial price goal.
  • Satisfied producers are more likely to price as soon as they see a profit and to price multiple crop years. They also are more likely to price a quarter or more of their expected crop before planting.
  • They are less likely to sell most of their crop right after harvest, price when they need cash flow, or price when fear of still lower prices sets in.
  • More satisfied producers said they use futures hedges and lock in the carry on stored grain, while dissatisfied producers are more likely to use spot cash sales.
  • Dissatisfied producers also are more likely to say they don’t understand how to use available marketing tools, and more than a third of them wish they had a mentor.
  • More than 20% of dissatisfied producers say they studied marketing in college but don’t understand how to use the various tools in their operation, while 16% say they understand futures and options but don’t have confidence using them.

How Producers Market Their Crops

  • On average, producers use four to five marketing tools.
  • The most popular marketing tool is storage, used by 82% at least occasionally; one in five farmers always store.
  • Cash forward contracts and spot cash sales are used by more than two-thirds of farmers.
  • Only about a quarter of survey respondents use futures or options.
  • Almost two-thirds price in small increments; only 5% go for the “home run” and price a large portion at a time.
  • Almost three-quarters of producers say they have a good understanding of their cost of production, although a smaller percentage use it in setting a price target for marketing.
  • Seventeen percent have a written marketing plan.

Factors that Affect Marketing

  • Wider use of diverse marketing tools is seen among larger operations (1,000+ acres) and among growers with higher levels of crop insurance – especially 80% or higher Revenue Protection (RP) – as part of their risk management.
  • Producers with 80% or more RP are more likely to price prior to harvest than those with lower insurance coverage.
  • Larger operations and younger producers are more likely to use their cost of production to set a selling price.
  • Those who are 35 and younger are more likely to use hedge-to-arrive contracts and lock in the carry when they store.

Practical Insights

Interviews with producers offer practical insights for success, whether farmers self-educate or partner with trusted advisors. For example:

  • “You can control weather risk with crop insurance. You have to know your cost of production and work off that; you have to know when you need to be marketing. Everyone would like to hit the top, but over time, I’ve realized that if you beat the average, you are doing well.”
  • “We thought about hedging and options but didn’t really use them until we got to know a trusted broker. Now we set targets and he helps with the timing. With Revenue Protection, we can afford to sell ahead, knowing crop insurance would cover us if we didn’t grow enough to meet the contract.”
  • “I have found that tackling it yourself pays for the rest of your life. You have to know your cost of production to be able to move forward. I know my cost within $10-20/acre.”

To view the Grain Marketing Survey Report, you will need to download Adobe Acrobat Reader.


Omaha, NE (68137) (edit)
52° Partly Cloudy
Sat

Sunny

Sunny

70°
Sun

Sunny

Sunny

78°
Mon

Chance Thunderstorms

Chance Thunderstorms

78°
Tue

Chance Rain Showers

Chance Rain Showers

68°
Wed

Chance Rain Showers

Chance Rain Showers

70°