Farmers in N.D. town form marketing clubWhile their fields are covered in snow, a dozen farmers in the town of Buffalo, about 40 miles west of Fargo, are discussing how to make money on those fields this year.
BUFFALO, N.D. (AP) — While their fields are covered in snow, a dozen farmers in the town of Buffalo, about 40 miles west of Fargo, are discussing how to make money on those fields this year.
The Buffalo Marketing Club was launched eight years ago with help from the North Dakota State University Extension Service.
The club has 15 members, all farmers from the Buffalo area who each pay a $50 annual fee.
They meet weekly at the Buffalo Community Center, where a stuffed buffalo head is mounted on the wall and a glass case with trophies from the old Buffalo school sits in a corner.
At a recent meeting, club members with pop, coffee, cookies and popcorn, sat on metal folding chairs around heavy plastic tables and talked about the struggling world economy.
If customers in other countries don’t have the money to buy U.S. grain, exports will suffer and the value of their crops will drop.
Hattie Melvin, the club leader, reminded members about the importance of knowing their per-bushel production cost and selling at a profit, not what they hope is the high price for the year.
Tim Berntson, 40, began farming in 1991 and started getting serious about marketing a decade ago.
Raising crops is enjoyable, he said,
“But marketing can be harder. It hurts more when you leave something on the table,” he said.
He and many other area farmers were hurt in the summer of 2007, when they sold grain at profitable levels, then watched prices rise even higher after harvest.
Now, Berntson is trying to do what makes most sense in current conditions.
“We don’t know what the future will bring,” he said. “We’re just trying to make the best decisions we can.”
A bushel of wheat fetched about $12 a year ago, about $8 in August and about $6 now.
The reverse was true in 2007. Many farmers sold part of their crops before harvest at $5 and $6 per bushel, only to watch prices soar to more than $10 per bushel later.
“In 2007, farmers sold the bulk of their crops too early, and in 2008, they sold too late,” said Mike Krueger, president of The Money Farm, a Casselton based grain marketing advisory service.
Marketing grain involves everything from the global economy to weather in top crop-producing countries. It is complicated by volatile crop prices, caused in part by the global economic crisis.
In 2008, the average monthly per-bushel price of wheat in North Dakota varied from $12.80 to $6.82.
“Producers haven’t had to deal with this level of volatility before,” said Amber Knudsen, agricultural products manager for Omaha, Neb.-based DTN, which provides marketing services and products.
Farmers too often try to “time” the market, or sell all their grain at what they believe will be the top price for the year, said Ed Usset, a University of Minnesota grain marketing specialist.
“They’re looking for the high,” he said.
Producers should look instead to a number of small sales producing “a good average price” that will give them a profit for the year, Usset said.
An essential part of the process is adding up the cost of such things as land, seed, fuel, fertilizer and equipment to determine the per-bushel cost of production, Usset and others say.
Farmers shouldn’t even think about marketing grain until they know their per-bushel production costs, experts say.
Elevators still store grain for customers, but the focus is changing to on-farm storage, said Bob Zelenka, executive director of the Eagan-based Minnesota Feed and Grain Association, which represents Minnesota country elevators and feed mills.
“Farmers are doing a lot more themselves,” he said.
Adding storage allows producers to do a better job of controlling their market by selling when they want to, not when they have to, said Steve Haman, director of business development for Northern Grain Equipment in West Fargo.