ACORN grain marketing 2008

							            Organic Processor and                                                        Relationship Issues
            Grower Relationships
                                                                     Introduction to Homestead Organics
                                                                     Buying issues
                                                                           Quality
                                                                           Relationships
                                                                           Logistics
                                                                           Cash flow
                                                                     The gross price versus the net price
                        Tom Manley                                   Suggestions for producers
                     ACORN – March 2008
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               Homestead Organics                                           What do I grow this year?
 Between Ottawa and Cornwall in Eastern Ontario                     1st – respect your agronomy and crop rotation
       Started on the family crop farm in 1988                            Heat units
       Split processing from the crop production in 1997                  Soil, fertility - nitrogen, drainage
 Organic whole grain services                                             Weed pressure and legume/grass rotation
       Storage, cleaning for food & feed, marketing                 2nd – choose according to your capacity
 Organic livestock feed                                                   Equipment available: combine, drying, transportation
       Complete grain rations, bulk and bagged, thru dealers              Storage capacity
 Organic farm supplies (seed, supplements, etc)                           Experience: stick to the basics; keep it simple
 Support, education, networking                                     3rd - Fine tune to market needs and prices

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                                                                                                                                       1
              Choosing a Crop Size                                                           Crop Selection
 Manageable crop sizes                                                High N, moderate weed pressure, high CHU
       Size of fields and equipment                                         Corn, as silage or grain
            • cleaning out seed drills and combine                     Moderate to high N, low weed pressure
       Managing weed pressure in multiple fields                            Hard red spring wheat, barley
       Spreading out risks relative to size                           Low N, moderate weed pressure
       Simplify your rotation                                               Soybeans, oats, legume hay
 Size and number of storage bins                                      High weed pressure
 Transportation to market – truck size                                      Hay or Buckwheat as a green manure
                                                                       Good winter conditions
 Customer requirements
                                                                             Spelt

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     Quality Issues in Marketing                                                              Quality Issues
 Quality requirements                                                 Quality concerns
      Heavy: high bushel weight – high N                                    Organic by default versus organic by design
      Healthy: high protein & good mineral profile – high N                      • Wise soil amendments, good equipment, knowledge & skill
      Pretty: colour, shape, damage, odour - handling                       Organic must be synonymous with highest quality
                                                                                  • Essential for good health, premium price, industry reputation
      Safe: mould, rancidity, contamination, GMO – mngt
                                                                       Common quality improvement tips
      Dry: you need to dry it; some buyers can dry it
                                                                               Chose good varieties, clean healthy seed
      Pure: other grains, bird & rodent droppings – mngt                      Clean vehicles, augers, combine, seed drill, storage, etc.
 Lesser quality concerns                                                      Good crop rotation & compost for nitrogen availability
                                                                               Good microbial life, soil mineral balance, drainage
      Dockage – we can clean it - combining
                                                                               Ability to learn: observations, education, reading
      Purity of feed grains: a little buckwheat will not hurt.
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                                                                                                                                                        2
                           Cash Flow                                                          Market Relationships
 Not a lot of cash available                                                   Relationships
       Young industry, young companies, capital is tight                             Long term relationship, loyalty, business development
       Borrowing capacity is all used up in infrastructure                           Flexibility, understanding, feed back, communications
       Buyers often need 30 – 60 days to pay                                         Multiple transactions: seed, multiple crops
       Some stuff gets stored for up to 12 months                                    Open to multiple relationships
 Solution: good marketing and crop planning                                    Geography
       Call buyers early and get early shipment dates                                Preferred service area – close to home
       Diversify your crops by time of year for cash flow                            Cost of transportation, rising fuel prices
       Diversify your markets for timely sales and cash flow                         Transporting small loads
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          Understanding the Price                                                        Farmer to Farmer Deals
 Gross price                                                                   Best: mutual price benefit, minimal transportation
       Set a price standard to all producers, easy to compare                  Many challenges:
       Watch for inflated prices with too many conditions
                                                                                      Optimal load size for both parties
 Net price                                                                           Timeliness: available when the buyer needs it.
       Pickup by the buyer or landed by the grower
                                                                                      Small pool of sellers and buyers
       Gross weight or net weight after:
            • dockage, moisture, screenings (splits, smalls, oversized)               Quality expectations
       Drying, cleaning, elevation and storage charges                               Mutually beneficial price, split the broker’s margin
       Marketing board fees for corn, soybeans, wheat                                Payment reliability
       Grade discounts: bushel weight, appearance, protein                           Documentation: contract, BOL, clean truck affidavit
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                                                                                                                                                    3
      Processor/Brokerʼs Margin                                                                     Seed offering.
 Infrastructure                                                                     Extensive list of organic seed products.
       Capital, interest, maintenance, low resale value                                   • Oats, barley, wheat, soybeans, corn, forages.
 Exchange rate fluctuations                                                         From all seed providers.
 Market fluctuations and inherent price risks                                       But based in Ontario and Quebec.
 Fuel price increases and landed price contracts                                    Cost of shipping to Atlantic Canada.
 Bad receivables                                                                          • Should not be an impediment
 Labour costs                                                                       No longer any excuses for conventional
 Quality assurance costs, shrink, invisible loss                                    Certifiers: pay attention to seed availability
                                                                                           • The 5 phone calls are often bogus.
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       Suggestions for producers
 Sell close to home
       Easy relationship, affordable transportation, seed source
 Establish relationships
         Constant communications, multiple services
         Don’t put all your eggs in one basket
         Be flexible and understanding
         Predictable and reliable quality and quantity
 Remove the sense of urgency
       Own your equipment, some on-farm storage, plan your cash flow
 Get contracts for critical conditions
       Edible beans, hulless oats, rye, early season sales
       Make best effort contracts: acreage, no replacement obligations

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