Farmers the internet and the Market

[ianben]

I have been reading and posting here for longer than I care to remember must be nearly ten years.

I am better informed and more understanding of many things.

Supply and demand and the markets control our prices and have not improved our ability to regulate prices, in fact if anything the improved availability of imformation has made them more volatile.

Are we missing something?

Does the internet give us all the information we need to be price fixers?

I hate selling malt barley at feed prices just because there is too much, the price of beer doesnt change and why should it.

If someone via the internet could recomend that malt barley demand was 50% down
We all read it, market 50% of our malt at a premium and 50% as feed.

Too simple?
Everyones is a winner compared to todays 100%feed.

What does it take to become a price fixer?

[charliep]

Suspect that it is pretty hard to be a "price fixer". Too many people to get
to agree. Too much incentive to cheat within the selling group. Holding
supplies off the market to force prices higher doesn't work either
(CWB/durum).

To achieve higher price via the internet or anything, you have to be able to
differentiate your product (not commodity) into something different that
satisfies a specific group of customers needs - an example is organic.
From there, an established demand base of customers and ability to
control market access to new entrants/voluntary discipline on current
sellers (everyone sees a benefit to cooperating). Having control over the
supply side and protection from outside markets doesn't hurt (supply
managed commodities like dairy/poultry in Canada).

Hard to do any of the above in a commodity world - undifferentiated
product that can be bought from a number of sellers.

The only other thing that may answer some (not all of your questions) is
price contracting in a value chain. Was at a western barley growers
association annual meeting where there was a presentation by a British
distiller/brewer/maltster (forget but Parsley may be able to help as a
friend of hers). As with Canada, British barley acreage coming
down/losing out to more profitable crops (you will tell me whether true).
Their solution was more creative contracting programs with specific
farmers that allowed the maltster/distiller to secure supplies (their risk)
and farmers profitable prices/market access. Issues like
quality/production risk could be jointly shared in the value chain or
insured outside the value chain using things like weather insurance. My
take home was being creative in the supply chain and working toward
common goals/shared risk. As you say, the value of the final product
(beer or malt whiskey) doesn't change much over time so an agreement
like this shouldn't be too far out of line.

Hopefully get some discussion on your idea. Others thoughts.

[parsley]

Ian, you have been a reader and contributer to this site for many years, and thank you for it.

Your words are consistently measured and to the point, and you are able to bring a British farmer's perspective to coffee row in Canada, and is is very much appreciated.

Ian, I believe farmers have enough internet information to be completely formidible marketers. Even the daily reports of when the ships leave is on line. The legal accounted statements of every company is online, so you know what we're dealing with.

It's a matter of focus. Canadian farmers truly have a good product but they don't know what to do with it. A little like a yearling bull put out in the pasture with 200 cows.

So they are ending up changing their product to meet the needs of the suppliers. And that is a recipe for finacial disaster, imho, because it develops a dependency, an addiction if I may call it that, on each supplier, with no knob to control costs. Good for the supplier and bad for the farmer. Actually, the suppliers promote differentiation. A product for this and a product for that. Sort of like the health crazes we find ourself tuning out on the radio. Cholesterol one day. Hype for folic acid the next week.

For suppliers, and ingredient manufactureres, it's all about marketing what they extract.

Plain food does a better measured job as building blocks for humans, than any band of three thousand scinetists who are still unable to satifactorily regulate thyroid medication with finesse.

charlliep, Tim Stonehouse is the maltster to whom you refer. Pars

[Burbert]

Most farmers and have experienced the cheating and lying in the market, when buyers downgrade, grain they are purchasing. Amazing number of reasons to downgrade, to wet, to dry, to thin, to thick, high protein, low protein, chitted, not chitted, moldy, mildewy, heated and rotten, germination no good, germination to good, smut, ergot, wild oats, to light, to heavy, stained, fusarium g, the worst kind, tough, damp, shrunken, broken, peeled, over threshed, under threshed, foreign matter, spring threshed, damaged due to hail, wind blown, mouse chewed, duck bit, goose downed, bleached, blackened kernel tips, auger damaged, nitrated poisoned, cows don't like your grain, due to poor farming, the list goes on, and on. In fact it is endless. The only time your grain is any good at all, is when there is a shortage of the stuff, then the buys will call you sir, when you sell it. They still won't pay what its worth, but they do call you sir, while cheating you! LONG LIVE THE CANADIAN WHEAT BORED!!!

[Hopperbin]

Burbert you forgot earth tagged.
I think it was Ian that had some quite nice HRSW contracts. Destroy the board.

[hedgehog]

there is a simple solution to the bad prices.
every farmer must stop using fertiliser, across the world.
yields will be about a quarter of normal, and prices will rocket.
just think, no borrowing for fert, no need to spray for disease, few weeds, quick easy harvest, less trucks and bins needed.
with no fert bill to pay, and prices rising, the bank will be keen to let you sell when you please, so no forced selling.
bingo, thats it all fixed!

[Choice2U]

Re: internet - It only makes sense that instantaneous knowledge (ie. internet, daily reports,etc) would increase volatility. 25 years ago, we only heard general info on what was happening around the world. Today, we can find out if and how much it rained in China 1 hour ago. Thus the "market" starts hanging on very short term information rather than long term. Example: As more market information became available it allowed S/U ratio's to decline for years prior to 2008 without the price moving up much.
Re: fertilizer - Something tells me that the "market" would find a balance in any situation and the profitability of the grower would be no different over the long term. No fertilizer, less grain, higher prices to the grower, maybe I should put on some fertilizer next year, more grain, slightly lower prices but still some profit, more fertilizer again, more grain, lower prices. It is a pendulum that swings back and forth. The fact that you're still on Agri-ville and farming is confirmation that there are profits to be made at various times and good management of the trends will help you stay in the game. Farmers lived poor and died rich when I was a kid and the concept is just as valid today although I have read of Agri-villers going on trips south (good on you) so things can't be all that bad.