Many growers make it a routine. They always sell to the same short list of favoured third parties, such as brokers, local dealers or elevators.
“Understanding who actually uses the commodity and identifying the actual buyers is a critical piece of market information,” says Jerry Bouma of Toma & Bouma Management Consultants, Edmonton.
Then, you need to determine how best to sell directly to that buyer.
“It’s critical for someone to know their customer, and the customer’s customer,” agrees the George Morris Centre’s Al Mussell. “If you become known to the customer as someone with good stuff who is easy to deal with and delivers quality on time, you’re successful at marketing.”
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Mussell says he knows a hog farmer who is always talking to buyers at Maple Leaf and always has pigs available for shipping on Sunday afternoon. The processing plants usually run short on Monday morning slaughter, so this keen can-do marketer fills that void with some of his best finished hogs.
“Top marketers have an attitude, a fundamental mindset, of asking what can I do to help my customer,” says Mussell.
Direct sales can eliminate extra charges, including commissions and handling fees that you will pay otherwise. In regions dense with livestock operations, many crop marketers sell directly to feed mills.
“The farmers who take advantage of opportunities are the most effective marketers,” says Linda Feltz, of Wallenstein Feed and Supply near Guelph, Ont.
Since the commodity markets are fluctuating more, it’s also more important to continually follow prices and currency values, and to be prepared to act fast.
“Volatility is now the norm, not the exception,” says Feltz. “Now if corn moves $0.03 a bushel in a day, it’s considered a dull day.”
“I’m in the front of the queue”
As a Harper appointee to the Canadian Wheat Board, Motiuk is trying to balance on a very wobbly fence. Personally, he doesn’t believe in mandatory selling through the board, but as a board member he’s obligated to make decisions that are best for the CWB.
His hope is that the grain-marketing legislation will be changed to include non-board selling as well as maintaining the CWB. He’d like to see the producer payment options expanded, keep the pool price and cash advance program. As a CWB director, Motiuk can’t participate in the P.P.O. so he takes the pool price.
“So we’re trying to lessen our reliance on the CWB on our farm,” says Motiuk. A decade ago, he invested in a few local hog barns and now he custom feeds about 1,000 cattle. Recently, he invested in another internal wheat hedge system — an ethanol plant which should be operating By Next Year.
“By being an investor, when we get a wreck, I’m in the front of the queue to sell to these hog and cattle operations,” says Motiuk. “We’ve just ensured ourselves access to a market.”
“Know what they want”
Even though the quality was good last year, the Lepps sold over a third of their winter wheat as feed. They found markets locally that were above pool price. Their area in Manitoba is intense with livestock and feed mills that import U. S. corn, so feed grain prices run a little higher.
Whether it’s to a feed mill, elevator or directly to a livestock farmer, the Lepps send samples first to ensure they’re meeting their customers’ needs and specs. And they always keep open communications, Lepp says. “Most often, they’ll have certain needs and let you know what they want before you deliver.”
In the past, they’ve sold corn and feed wheat directly to local dairy operations, generally via a cash sale. “Usually, we agree on a price by talking to a couple traders first to see what the going price should be and then see if it’s satisfactory for both parties,” says Lepp. They receive a little premium because it would cost the dairies more to bring the feed from elsewhere, plus the Lepps don’t get charged dockage.
