Farmer-managed marketing

12 Nov, 2013 01:00 AM
Chris Heinjus: “You’re managing a multi-million dollar business, and marketing is a big part of what drives profit levels.
Chris Heinjus: “You’re managing a multi-million dollar business, and marketing is a big part of what drives profit levels."

THE current trend towards pools or managed marketing products undervalues growers’ ability to conduct their own grain marketing program, according to director of South Australian-based advisory business Rural Directions.

Chris Heinjus, based at Freeling, in SA’s Lower Mid North, said he believed the current environment meant farmers could easily value-add by conducting their own marketing programs.

“It is easy to do and it cuts out on costs by using pools that may not achieve anything more than you can do yourself anyway,” Mr Heinjus said.

He said he believed the theory that farmers should concentrate solely on grain production and leave marketing to others was somewhat of a cop-out.

“You’re managing a multi-million dollar business, and marketing is a big part of what drives profit levels.

“It’s easy enough to get the information, you just need to keep yourself involved.

Mr Heinjus said the market monitoring did not need to be onerous.

“You can get most prices via a daily text or email, so you can still check it while you are away following harvest, and you can get information from specialist market analysts to provide a big picture.

“There’s also no prices over the weekend, so it is not a huge ask to stay on top of it.”

Mr Heinjus said farmers needed to realise what a good marketing program could add to the bottom line.

“We often see growers agonising over agronomic decisions that can add a couple of percent in terms of yield, yet there is not the same rigour applied to marketing decisions that can impact pricing by as much as 20pc.”

Mr Heinjus said the Rural Directions business had evolved from a family farming business to an agribusiness employing over 20 people.

The company provides advice to agriculture. Along with marketing, there is also business analysis and strategic direction services.

“We grew from our family farm business, Pareta Farms, which did a lot of farming through lease arrangements.

“Today we advise clients that produce 10pc of South Australia’s grain.”

Mr Heinjus has firmly held opinions on grain marketing.

He said growers needed to have a portfolio of marketing options in place.

“You don’t invest all your money into one corner of the stock market, why would you rely solely on taking cash at harvest or marketing all your grain the following autumn?”

He said growers needed to utilise a mixture of forward contracts and physical sales of grain post-harvest.

“I’ve got positions right out to the 2014-15 harvest for our own grain.

In terms of worries over production risk, he said only small parcels were committed to a straight physical contract.

He said the mystique surrounding forward marketing products such as options and put contracts was unnecessary.

“It’s something that can be managed very easily.

“We’re not talking about trading options, which is ultimately a punt, but just using them as a tool to market your own grain.”

Mr Heinjus said in regards to marketing physical grain, he advocated using the strength of the bulk handling network and using warehousing rather than storing on-farm.

“There are cases where on-farm storage can work, where you’re nearby major grain users, but generally its best to let the bulk handlers have the worry of keeping the grain in top condition.”

He said growers were best served by dealing with reliable businesses and spreading their sales over a number of buyers.

“It goes without saying that it takes a lot of grain to make up for what you lose if you get a non-payment.”

Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
Date: Newest first | Oldest first


Philip Downie
12/11/2013 5:40:25 AM

Marketing or selling? Looks like the later to me and there is a big difference.
Jock Munro
12/11/2013 6:47:49 AM

Spot on Phillip. There is a big difference. We can sense that the very foundation of our wheat industry that was built on quality and service is slowly but surely being disassembled.
Chris Heinjus
12/11/2013 7:18:15 AM

Further to Philip Downie's comment..thanks for your comment and I agree with what you are saying however if I write an article on grain selling then the target reader does not always relate. More important is the message that it is not that hard. The grain farmer can and do effectively sell their grain in what is a highly commoditised market place. Cheers
12/11/2013 8:19:35 AM

Pools are just a form of socialism. Don't touch them.
eric hunt
12/11/2013 11:50:36 AM

Chris, so much of what you say makes sense. It is much the same as the billions of dollars people own in superannuation. They too could do a lot better with that money if only they would educate themselves and then step out and be more proactive in funds markets to make their super assets earn better returns, and save on fees and commissions to others. So why do you think super fund owners and farmers are not following the kind of advice you are giving? If you can unlock that mystery you might help people a lot more than you and your colleagues have done in the past.
12/11/2013 12:28:42 PM

Nice article. Like it or not deregulation is here and growers have to take control of one's destiny. Yes, it's not easy but nothing is whereby you have to invest your time and energy. The same focus should be on marketing as production of your crop. Don't throw your hands in the air and blame those nasty traders if you just blindly sell your grain at harvest, this is money for old rope for traders. Take control of your product and sell underpinned with a considered strategy! All the best for harvest.
Chris Heinjus
14/11/2013 7:46:32 AM

Further to Erics comment. Thanks for your insightful comments. I ask what is the biggest growth area in the superannuation industry? Answer Self-Managed Super. To help unlock the mystery I believe that the answer for the grains industry is not in the grain industry, it must come from the more established financial sector .We actively promote the concept of Self-Managed Grain Pools. As we continue to learn we aim to educate and demystify such that our clients can improve their businesses. Cheers
David van der Walt
16/11/2013 8:39:41 AM

Chris, can you explain how you see Self-Managed Grain Pools differ from the current grain pools?
Ted O'Brien.
17/11/2013 7:06:42 PM

Remember this. AWB Ltd was trashed and busted by the ALP and our media, prompted by US traders. We were told that the Wheat Board and later AWB Ltd made secret, corrupt payments to Saddam Hussein. I, with no special source of information, knew in detail that those trucking fees were being made, at the time they were being made, that they were properly justified, and were approved by both the Australian government and the UN, who paid for them. There was nothing secret about them.
17/11/2013 7:20:01 PM

poor old jock doesn't get it yet and its been a while since deregulation happened maybe head to SA jock and we will give you a hand even attend a chris hienjust workshop you may be enlightened. jock speak to any ex awb pool managers who are now employed else and they can now speak without or favour common thread the all quote " we just had to undercut the market to make sales" and "that's why cash selling was at most times best when attractive prices were on offer" and "we just couldn't compete with strong cash prices"
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