Planning For Success
Apr 23, 2018
By Devin Schierling, TMA Sales and Marketing Manager
Success doesn’t happen overnight. Success is often the product of countless hours of preparation and hard work that results in an excellent outcome. The last several years the production agriculture and commercial grain merchandising industries have been a grind. Whether we were dealing with volatile and unexpected weather events or new trade sanctions, the factors affecting both the producer and industry have been occurring at a rapid pace. In the face of these challenges, I couldn’t be prouder of the effort put forth by each of our TMA member’s grain locations to help TMA successfully and profitably execute our merchandising plan.
As we enter each new season, TMA works closely with our locations to estimate their expected grain receipts for the upcoming harvest. This process is done with the producer in mind, to ensure your facilities are prepared to meet the harvest demands. Individually, members of TMA would be forced to move grain before harvest, but together we are able to utilize all the members grain storage space to maximize the value of each bushel. Working together under one warehouse license allows us to let the market dictate when we move our grain to capture revenue while still handling the harvest bushels. In merchandising, environments like today bring to the surface the importance of communication. Communication is extremely important to make sure by the end of harvest our storage is full.
The value of grain storage is at a near record high due to several years of bountiful crops and has created a market opportunity called “carry.” Carry in the market, in its most basic definition, is the value of grain in the future is worth more than its’ value today. In this type of environment, your cooperative can capture additional value in the grain sold by storing until the market provides a signal to sell. Two years ago, the market was providing a signal to hold grain away from the market and TMA decided to invest in building a bunker of nearly 5 million bushels near Yoder, KS to capture the carry in the wheat market. This allowed TMA to move most of the wheat from facilities in the CPC, Halstead, and MKC territories to make room for fall harvest while still adhering to the signals the market was providing. The plan worked to perfection and allowed TMA to capture greater than 5 million dollars to share back with its owners.
Once harvest is complete, it’s the responsibility of TMA to add value to our owners by continuing to drive expenses out of our plan. One of the key pieces of our plan is managing the truck logistics of moving grain to the right market at the proper time. One of the strengths of the TMA elevator system is its geographical distribution. This distribution allows us to move grain in rounds decreasing the overall cost of moving grain to market. One of the moves that has added the most value to the TMA system is moving milling quality wheat from Central Prairie Co-op to the flour mills in Wichita and picking up corn from the Patterson location of Halstead Co-op to be delivered to Kansas Ethanol. Back hauling is an example of an efficiency gained by members of TMA working together to add value for their producers.
Building relationships with our industry partners are instrumental in executing our plan. TMA strives to be a supplier of choice with our local and international purchasers of grain. The trust TMA has developed over the last 17 plus years of delivering quality grain in a timely manner to our domestic markets allows our team to be counted on as a key part of the local supply chains. Having the ability to provide year-round supply or quick ship grain at the right specification provides us with access to markets that increase the value of our producers’ grain.
There is no better example of adding value to a crop than what partnering with CHS has provided to our members through the shuttle loader joint venture with Producer Ag, LLC. CHS’s access to international markets and relevance in the rail freight market has increased the value of every soybean we handle. By being able to execute large sales in a short amount of time through the train shuttle market, TMA could hold soybeans longer into the season, capture additional revenue, and still make room for the upcoming fall harvest. This move wouldn’t have been possible if our only market was the local processors, highlighting the value of increasing our market access.
TMA’s focus on maximizing the value of each bushel, driving out costs while increasing value, and developing domestic and international merchandising partnership has allowed us to execute our plan successfully. With your support, TMA could execute a plan that started several years ago to pass back record earnings to its member cooperatives. These earning are shared back with you, the producer, through the grain patronage system, renewing of local assets, local jobs, and many other ways that stimulate the rural economy.