Minnesota Farmer


30 days: making the sale after the harvest
November 25, 2013, 11:53 am
Filed under: Ag education, Fall, Farm, history | Tags: , , , , ,

So the crop is in the bin and life is good, or is it?  Now may be the most important time in a farmer’s life, getting his crop sold at a price that will pay the bills.  So on the 24th day of our 30 day challenge let’s talk about making the sale.

If life were simple a farmer would take his crop to market and always get a price that would pay the bills.  But life is not simple.  Buyers always want to buy cheap and sellers always want to sell high.  Times of high demand rarely mesh with times of high supply, and harvest time is notoriously the lowest price for farm products.  Everyone knows the crop is there and must come to market, setting the price can be really hard.

In an average world prices go in predictable cycles.  The lowest prices would be found nearest harvest and the highest prices would be found at the point furthest away from harvest.  You would develop a marketing roller coaster that looks like this.tylerarticle930The problem is that even though farmers know of this cycle, they end up selling most of their crop on the lower end of that roller coaster.  Sellers want just a bit more, so they wait for the very top of the cycle.  Then as the prices start to go down they hold on in panic, sure that prices will get better.  Many end up selling in despair of ever seeing the hoped for top again.

Periods of lower crop supply or excess crop supply will change how this roller coaster runs.  Highs can get higher and lows can get lower, or the whole thing can flatten out and there will be little difference from high to low.  Sometimes the high can come just before or after harvest and really mess up your plans.  Selling your crops for a price that will pay the bills can be difficult to impossible some years and no problem at all others.

Farm folks spend many hours in the off season studying markets and reading market opinions.  If they are lucky they will sell most of their crop on their way to the top.  Unfortunately that is rarely the case.  Still, it is a game we have to play if we want to stay in farming.

So next time you start to think that farming is easy, ask a farmer to explain to you how markets work and what he does to market his produce. I’m sure it will leave your head spinning.

Michael

Advertisements

Leave a Comment so far
Leave a comment



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s



%d bloggers like this: