Now for a reply to the industry spokespersons.
They would agree that the "contracting" system for farmers products which have yet to be sown or harvested is an integral part of the agricultural marketing system.
The perceived bennefit is that a price can be locked in that will guarantee a profit, and that it will exceed what their neighbors will end up receiving.
No sense arguing that you might make an extra nickel or even more. Could be less too; and could be dollars less in years like 2008 or even a few months ago. All I'm saying is that having the majority or all production contracted; certainly shuts oute opportunities; where you could have paid off the farm debt.
But contracting has other ramnifications. One is that the buyers have locked up several months of guaranteed supply; all usually starting with a new crop year. I submit that equates to about a half year where there is not much need to bid agressively for product. After all the non-contractors need to move some grains too; and the price appears stalled at a few nickels less than the month's old contracted bids. Just how is that repeating scenario in any farmer's best marketing plan.
Oh; and as any contract holder knows; it is presupposed that the buyer is still around; and that they have the wherewithall to complete payment some months later.
There tend to be problems completing deals with what turn out to be high priced products.
They would agree that the "contracting" system for farmers products which have yet to be sown or harvested is an integral part of the agricultural marketing system.
The perceived bennefit is that a price can be locked in that will guarantee a profit, and that it will exceed what their neighbors will end up receiving.
No sense arguing that you might make an extra nickel or even more. Could be less too; and could be dollars less in years like 2008 or even a few months ago. All I'm saying is that having the majority or all production contracted; certainly shuts oute opportunities; where you could have paid off the farm debt.
But contracting has other ramnifications. One is that the buyers have locked up several months of guaranteed supply; all usually starting with a new crop year. I submit that equates to about a half year where there is not much need to bid agressively for product. After all the non-contractors need to move some grains too; and the price appears stalled at a few nickels less than the month's old contracted bids. Just how is that repeating scenario in any farmer's best marketing plan.
Oh; and as any contract holder knows; it is presupposed that the buyer is still around; and that they have the wherewithall to complete payment some months later.
There tend to be problems completing deals with what turn out to be high priced products.
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