Staunch the Bleeding
Prairie Routes is rolling out new programs to help keep family farms in business, during what look to be a rough few years ahead.
2024 was already a hard year for status quo commodity grain farm businesses, and things aren’t looking any better right now. With fertilizer markets up and grain prices just holding, how much equity might farms already be bleeding?
In the past, strong grain markets helped keep farms profitable in spite of rising crop input expenses. Going forward, the economic conditions in China that contributed much of that strength look very different.
Managing Expenses
In other words, unlike in the past, if farmers spend more than they can earn to produce this year’s crop, China’s not set up to gobble up excess supplies at higher prices anymore.
Responsible marketing and reducing expenses have become matters of survival.
The good news is, there is some low-hanging fruit to start picking through to add to a farm’s basket of revenues. Grain producers can request refunds on their checkoff payments, for example, a right that is legislated for most commodity groups.
The application process may appear daunting, and it’s an unpopular move in some circles to be sure, but the amounts tend to be substantial. By law those funds belong to farmers, and this year, they might be better spent differently.
Responsible Marketing
Having a marketing plan also makes a difference. A good one might even convince a banker to knock points off a farm’s borrowing rate, creating long-term savings.
In a recent podcast, when asked what his marketing plan for 2025 was, a farmer explained that his plan never changes: sell 40-50% of the crop ahead of harvest at prices that represent a decent margin on grain production. This year, he wants that opportunity to come along again – and that’s the plan.
Folks in the grain trade tend to agree that:
Profit margins never been so bad for so long;
None of us has lived through this type of market uncertainty before; and,
It can be incredibly stressful.
With multiple generations of family wealth on the line, farmers understandably may be paralyzed with fear.
Hence the title of Prairie Routes’ new grain marketing report: Fear is Not A Market Signal. Twice a week, subscribers are reminded in plain language and with direct guidance that emotions have no place in decisions about selling grain.
Furthermore, we ask hard questions like, what place should buyers have as farmers make decisions about selling grain? Everyone knows that fudgery occurs around contract terms, grading, weights and payments, but who on the farm is staying on top of it all?
Fixing Mistakes
The bad news is, if a farm isn’t monitoring all the documents, it’s leaving money on the table. Checking delivery receipts, monitoring payments, comparing unloads to harvest weights, and shopping around grades are all ways to preserve funds on grain farms, in not insignificant amounts.
If you’ve read this far, hopefully you’re a grain producer in western Canada looking for ways to pad 2025-crop margins, keen to hear more about putting marketing together with document organization into a business plan. Please reach out to hello@prairieroutes.ca to set up a call.
And in the meantime, check out Fear is Not A Market Signal and let us know what you think! The pricing is $24/month, $249/year, or $649/yr, which includes one 90-minute meeting with professional consultants regarding HR, financial planning and/or market development.