It’s easy to listen to good advice.
It’s hard to change lifelong behaviour to fit in with that advice, even if you accept it.
That principle is on display right now with the discovery by many farmers that selling grain the old CWB way doesn’t necessarily work in the post-CWB world.
Farmers who test their grain and shop it around to many buyers are often discovering that low-grading grain, which is worth little as a bulk delivery to the local elevators, can be worth much more to other buyers.
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For the local elevator, the grain might just look like what the grade says it is. To a buyer wanting a specific set of specifications in the wheat or durum they buy, the grade doesn’t matter, but the specs do. Those are essentially different markets.
This shouldn’t shock anyone, but it generally surprises people when they are faced with it for the first time.
Part of the surprise comes with actually seeing the reality of something that the rational side of your mind believes exists, but that the emotional side has trouble accepting.
To find that the same grain can be worth hundreds of thousands of dollars more to one buyer than another is hard to swallow, even if you understand why.
But some of the shock comes from people not listening to advice. I wasn’t surprised last week when reporting on the massive spreads between grade-based and specs-based grain because I’ve been writing about that situation for three years. Analysts have been telling me since the end of the CWB monopoly that wheat is no longer just bulk wheat, but often now is valued based on specific qualities for which individual buyers will pay premiums.
The grade marketing system, which was the basis of the CWB days, still works with good quality wheat and durum. However, if a crop has minor downgrading features, basing the price on grade can overlook some of the crop’s true value.
To unlock that value, a farmer has to go through the work and expense of getting each of his bins tested and then reaching out to multiple buyers to find which one, perhaps quite far away, sees it as a quality product rather than a discounted commodity.
This shouldn’t surprise anyone because we’ve been reporting this situation for years.
But for those who need to learn through loss, here’s a chance to learn a painful lesson that could make you hundreds of thousands of dollars.
The farmer I described in my story last week believes his testing and shoppingaround made him $500,000 more than he would have gotten if he had simply accepted the local elevator prices based on grade.
And the adviser I quoted saw hundreds of her clients make lots of extra money from doing the same, but also said she saw hundreds lose out on those opportunities because they didn’t do that work.
It’s hard to change long-term marketing behaviours to fit in with good advice, even if you accept that the advice is probably valid.
But ask yourself this question: what could you do with a few hundred thousand extra dollars?
ed.white@producer.com
