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.”