The keynote speaker at the annual Ag is Everyone’s Business event told a crowd of nearly 300 people that he wants farmers to be risk managers and not speculators.
“Speculators always lose money,” said Mark Gold after the event. Gold, a managing partner of Top Third Ag Marketing, said 7 percent of traders in Chicago can beat the odds, “which means that 93 percent can’t, and if a farmer has grain in the bin or is going to be growing grain this spring and hasn’t protected it with a futures contract or option, then they’re speculating with that grain.”
The Ag is Everyone’s Business breakfast, held Friday morning at Southern State Community College’s Patriot Center, is now in its seventh year. The event is coordinated by the Highland County Chamber of Commerce.
Gold said the old adage “you have to spend money to make money” was never more true for farmers, advising them that there is a cost in doing anything and that buying a commodity option is a great way at protecting downside risk. A “put option” could be employed as an insurance policy, he added.
In his booklet “Marketing in the Top Third,” Gold described a “put option” as one that gives the buyer the right, but not the obligation, to sell, or “go short,” on the underlying futures contract at the strike price on or before the expiration date of the option.
With the focus of the event being on the business side of agriculture, State Representative Shane Wilkin said farming is the biggest business in the state, and that many of his colleagues in Columbus have a connection to the family farm.
“The focus now is on the state budget and what the governor proposes,” he said. “At that point, there will be adjustments made across the board, but one of the things concerning me is infrastructure issues when it comes to moving farm equipment.”
He said the transportation budget will be unveiled in March and with that, he knows of several roads in the 91st House District that are heavily damaged due to recent flooding. That could prevent farmers from getting in and out of their fields this season, Wilkin said.
“If you can’t get your crops to market, everything discussed here today doesn’t matter,” he said.
Gold’s contention was that every farmer needs to be more of a marketer, something that Highland County Commissioner Jeff Duncan, who farms in the Leesburg area, agreed with.
“It’s easier to produce it than it is to sell it,” Duncan said.
Gold asserted that most farmers wind up selling their commodity in the bottom third of prices, because they don’t sell or price their product in a timely manner.
“If I could get every American farmer to price or sell his grain within 30 days of harvest,” he said in his booklet, “they could enjoy a bull market every year, not just during those years when there is a glitch in supply or demand.”
To that end, he advised the farming professionals in attendance to adopt a four-point plan for success:
1. Develop a marketing plan.
2. Combine effective crop insurance with the marketing plan.
3. Use options to manage risk, such as buying put options to protect unsold product and to buy call options to replace grain or livestock already sold.
4. Do not be a speculator.
“Unfortunately, we’re facing some tough times because of the trade war with China,” he said, “and the secretary of agriculture said that farmers are on their own for marketing this year, which means no market payments, so if these farmers have a good crop this year, there is considerable risk.”
He said one of the problems facing both the small farm operations in the 21st century stem from the temptation for smaller farmers to sell out, especially if there are no children interested in continuing the family farm.
Highland County Commissioner Terry Britton has a small hay operation outside of Hillsboro, and understands the importance of the small family farm.
“Agriculture is the number one economic driver in our county,” he said. “Without it, we would really be in dire straits, and programs like we’re at today will give farmers, I think, an advantage in their farming operations, big or small.”
For larger operators, Gold said, there is the temptation to ignore the dynamics of production, pricing and selling, saying “there’s nothing wrong with becoming large and having great crops and great yields, but you still want to get great prices for those crops, and many large farms don’t understand the tools that are available to help manage those risks.”
At the close of the agri-business seminar, an auction was held for the sale of two pedal tractors and a grain cart.
Helping with the logistics of the event was Jordan Williamson of the Berrysville area, who is a member of the Hillsboro FFA, and whose chapter shared in the benefits from the pedal tractor auction.
Proceeds from the auction are earmarked for the FFA chapters in the five Highland County public school districts.
“I’ve shown pigs at the fair and right now I work at Starlight dairy and grain farm,” she said. “I’m going into the occupational therapy assistant program where you work with disabled children, but I’ve also recently done an equine therapy program where you work with horses, so having worked on a farm I might get into that instead.”
She said she is currently taking classes at Southern State Community College and plans to transfer to Shawnee State University.
The first tractor in the auction was a Case IH Farmall 656 pedal tractor with a grain cart, which is also a Case IH Farmall and matches the tractor. Both were donated by Bane-Welker Equipment in Wilmington.
The second tractor was a John Deere 720 pedal tractor donated by Five Points Implement Company in Hillsboro.
Reach Tim Colliver at 937-402-2571.