Grain

Solve "Y * P = GI" to Strengthen your Bottom Line

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Grain Marketing thoughts from Tom Guinan, VP of Producer Grain:


A few years ago, I attended a grain marketing seminar. The speaker started off with a mathematical formula:  Y * P = GI.

That was a something I had never seen before, and certainly did not expect to encounter during a grain marketing seminar. 

He went on to explain it as YIELD times PRICE = GROSS INCOME. 

His point was that since GROSS INCOME is derived from equal parts of YIELD and PRICE, farmers should try to spend equal amounts of time on both sides of the equation. Then, he talked about his personal theories of why this doesn’t happen in actual practice. It resonated with me, and I’d like to share some of that now. 

Basically, it boils down to what farmers are engaged in when they aren’t busy in the fields. He listed several activities that usually happen during the winter: 

  • Seed meetings
  • Chemical meetings
  • Equipment meetings
  • Fertilizer meetings
  • Grain marketing meetings

If you’re like a lot of people, you probably try to attend some of these winter meetings. His point was that if you went to all 5, you’d effectively be spending 80% of your time on YIELD and 20% on PRICE. 

Then, he asked a rhetorical question: Why do farmers spend so much time on one side of the equation?

The short answer is because they LIKE playing in the dirt, growing crops, harvesting and everything that goes with it. And they HATE marketing grain. While that is a very broad over-generalization, he made his point. We tend to spend time engaged in activities we enjoy; staying away from those we don’t.

I know winter is almost over and most people are going to be focused on planting their crop, soon. Rightfully so. However, between now and Harvest, I think most of you owe it to yourself to learn just a little bit more about marketing grain. Check out the marketing alternatives on our website: https://www.landuscooperative.com/grain/grain-marketing; set up an appointment with your Landus Grain Marketing Advisor this summer to discuss ONE contract you’re unfamiliar with; go online and look for other resources to read, and then follow up with your GMA on those. Whatever it is, try to learn a little and then build on that knowledge little by little. Over time, as you spend a little more time on the other side of the equation, you might find out that it can indeed be learned, and it might help your bottom line even more than you might have guessed initially.