Talk It Up

Gilbert Ferré grows 2,500 acres of wheat, barley, oats, canola and peas in the Zenon Park area of northeastern Saskatchewan. His son Nicolas farms with him, much as Gilbert farmed with his own father when he started out in 1974.

Now, with years of experience behind him, Ferré doesn’t hesitate when asked what marketing advice he has for younger producers coming into the industry.

“Talk to other farmers,” Ferré advises. “Find out what works for them. Talk to the elevator companies. Subscribe to marketing newsletters. Talk to the Wheat Board. Gather as much information as you possibly can.”

Market intelligence, he says, is what producers need. On a daily basis, Ferré and his son make time to discuss what each has heard about events in the grain markets and take stock of opportunities that might be developing. Earlier in the summer, he explains, he and Nicholas began watching the drought in the Black Sea region that limited the availability of barley for the lucrative Middle Eastern market.

“This is opening up the possibility for us of selling barley for export at some pretty good values, something that we can’t do every year,” Ferré says. “It’s not just a matter of knowing what the basis is at the local elevator or what specials are on. We have to know what the end users are doing and what they’re looking for.”

Flexibility, Ferré insists, is very important.

“You can’t know from one year to the next what will make money for you. Sometimes, you have to go against the flow. Look at flax this year. The Triffid scare drove acreage down and now prices are over $11 per bushel.”

But flexibility mustn’t be mistaken with a lack of planning. On the contrary, Ferré is a firm believer in the budgeting process and spends a good part of his winters looking at cropping options and seeking the advice of experts on what to grow.

“My two best friends are my banker and my accountant,” Ferré says. “I use them as sounding boards for the figures that I come up with. I also make sure to consult with agronomists.”

Ferré believes this enables him to prepare budgets that accurately reflect his cost of production. He plugs in amounts that represent high, medium and low scenarios for prices and yields based on his anticipated cropping program, and then he looks for positive contribution margins — that is the difference between expected returns and his total fixed and variable costs.

The crops with the highest contribution margin are the ones he will maximize — to the extent that his crop rotations will allow. Ferré’s soil is his factory, he says. To keep it operating at full capacity, he is very mindful of his rotations and he soil tests regularly.

Producer car loading also helps keep those margins in the black. “In the past crop year, we shipped all of our wheat in producer cars along a short-line that was purchased by local producers, including ourselves, a number of years ago,” Ferré says.

While he works on his budgets throughout the fall and winter, Ferré only finalizes them in spring, in order to reflect the most up-to-date information. Even then, they are not set in stone. Should soil conditions or markets dictate a last-minute change — as they did this past spring with the excess rain in Saskatchewan — he tries to adjust his plans accordingly.

The increased volatility in agricultural markets, he says, has not substantially altered how he plans to market his crops. He has increased the time and effort he puts towards following the markets but notes that the increased presence of investment funds has made it extremely difficult for producers to read the markets based on fundamentals of supply and demand.

It has also confirmed for him the value of selling throughout the year, one shipment at a time, so as to avoid marketing everything at a specific point when prices may be at their lowest. While this may mean missing some highs as well, it is better than selling everything before a bull market has fully run its course, which is something that happened to a lot of producers, especially those in the U. S., in the fall of 2007.

After all of that is said and done, Ferré says it’s critical that his marketing plan help him get what he wants to get out of farming.

“I really love what I do,” Ferré says. “It’s the main reason I farm. I have told my son that production agriculture is no get-rich- quick scheme. You have to adapt to circumstances and constantly be on the look-out for opportunities.”

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