Tough Times Equal Opportunity
May 03, 2017
By Devin Schierling, TMA Sales and Marketing Manager
Commodity prices for grains may not be what many are hoping for at the moment with prices below break-even in many cases. Markets have switched from a demand to a supply driven markets with the abundance of grain stocks we have seen all throughout the world. So, the question one must ask themselves is what opportunities exist in this environment we are seeing today?
A common opportunity many consider is to find products to raise which are not oversupplied to take the place of those which are. Cotton has taken the place of many acres in the southern United States as prices for cotton and demand has been relatively strong over the past several years. Soybeans and canola as members of the oil and protein seed products continue to manage more demand around the world as economies continue to improve. These are crops which take more agronomy expertise and fertile ground to grow. Prices have remained at levels which allow profitability in most markets. A growing number of farmers in Kansas are even looking into the possibility of growing industrial hemp.
Identity preserved (IP) crops are also a possibility as you grow a particular type or quality of a crop. Some examples of IP crops grown for food grade include sorghum, corn nuts, Durham wheat, milling quality wheat, corn enzyme technology, and high oil sunflowers. These are just a few of many IP options to consider. IP crops are often restricted by the amount of demand the end-user needs as it is usually very specific.
Livestock production is another opportunity which many producers use to offset crop prices. With lower commodity prices, we have seen an increase in the diversification of our family farms. An opportunity exists in protecting both grain and livestock prices while they are at profitable levels and managing your risk for the current and future seasons.
Sharpening one's skills in risk management can also be an opportunity. Many producers did not worry about the decline in prices near as quickly because they had forward coverage at profitable levels for the current and future crop years. Profitable levels was often a result of a combination of understanding marketing options, utilizing crop insurance and determining what the most profitable crop is. The longer we remain in a supply driven market, the more critical understanding your options on these three factors are.
The opportunities above are all based on one’s willingness to change and adapt to the future. I always ask myself when thinking about questions like this is what will the producer look like in 5, 10 or even 15 years? Willingness to change and adapt to the future is the foundation of what farmers of the future will need to possess.