Minding Ag's Business
Marcia Zarley Taylor DTN Executive Editor

Wednesday 09/19/12

Better Soy Marketers Pocket a Second Harvest

Does your marketing make the grade? A study of actual farm records by the financial consulting firm AgriSolutions finds a handful of "A" students have been trouncing USDA's season average cash price in soybeans since extreme volatility struck grain markets in 2007. In fact, some operators were able to capture $7/bu. or more compared to those at the bottom of the class in three of the last five years.

Real returns for soybean growers in the AgriSolutions database showed gaps wider than $7/bu. among producers for three of the last five years.

USDA's season-average cash price is based on central Illinois bids and heavily weighted to harvest sales. It estimates that farmers received an average of $10.10, $9.97. $9.59, $11.30 and $11.70/bu. respectively for the 2007-2011 crops.

Delving into actual farm revenues for each season's crops, AgriSolutions found averages were masking huge differences between operators. It studied cash soybean revenue and bushels sold by crop year from more than 300 farm operations and 300,000 acres across the country. Profits or losses from hedging accounts were not included.

"The size of the variation among producers really surprised us," said Sam Bachman, an analyst at AgriSolutions in Brighton, Ill. "It really shows marketing is an area where many growers could improve their overall profitability. And it can be an opportunity for smaller growers to stay competitive with those who farm more acres but generate less revenue through marketing."

On both the 2008 and 2009 crops, for example, the range in operator returns exceeded $7.50/bu., Bachman noted. In 2010, the gap was about $7/bu. That's almost as good as double cropping the same acres.

Read and comment on all DTN Ag Business Benchmarks at the Minding Ag's Business blog.

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Posted at 4:31PM CDT 09/19/12 by Marcia Zarley Taylor
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