Kansas Association of Wheat Growers

December 4 Dan Maltby Marketing Newsletter

I received an email from a friend this week…

 

I firmly believe, as clichéd as it may be, that this industry “lacks transparency” in an extreme way. The average farmer doesn’t know: 

* How basis is calculated. 

* Can you deliver on a contract? 

* How much money elevators make on carry and storage. 

* What is carry? 

* How do elevators make money? 

* The cost of regulatory burdens on elevators and vice versa. 

* How much it costs to ship a bushel of wheat via rail. 

* The value of protein.

* How to capture that value. 

* Where does their wheat go? 

* And on and on … 

 

Plenty of blame to go around. (elevators, rail, KSU, farmers, us) Elevators don’t respect farmers and farmers don’t trust grain companies. It’s time for farmers to be a lot more demanding. Or take matters into their own hands. Lots of work to be done, but work is good. And we do good work. Let’s change the world.

I sense his pain. USA HRW wheat farmers and their supporters are frustrated with low wheat prices, and in effect how the market works. And maybe that’s the real culprit. In a free market, ultimately “fundamentals” (supply and demand) will win, but therein lies a key issue…just how “free” is the free market? What is it free of?

 

I always thought a free market would be free of government intervention, but I’m pretty sure that is a naïve concept. If nothing else, I thought a free market would be “fair”, but I suspect the concept of “fair” is hard to define, let alone “enforce”, and just who exactly is doing the “enforcing”?

My pain comes from the realization this is the 299th issue of this weekly wheat market update I have written, and I thought I worked hard to answer many, possibly most of those questions. But I admit now I wonder if everything I’ve written these past 6 years has been a waste of time.

What have I accomplished? What is my legacy?

In that regard, I am working on changing my boilerplate, maybe to what is shown below, and after the next 6 years, I hope someone will be able to say “he made a positive difference in the way we do business”.

Charts and discussions follow, with the goal of giving you useful information to help you with your business. My disclaimer remains the same: these are my sometimes rapidly changing opinions, but I believe you should: 1.be willing to store your wheat, 2. apply 30# of N at planting, and 3. don’t sell wheat to elevators who do not post protein scales, up and down.

 

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Source: Kansas Association of Wheat Growers