Panel’s advice to farmers: Hedge, but don’t speculateAgricultural producers looking to maximize their profitability would be wise to know the difference between hedging and speculation on the futures market, according to Vince Boddicker, manager of Farmers Trading Co. of Mitchell.
By: Austin Kaus, The Daily Republic
Agricultural producers looking to maximize their profitability would be wise to know the difference between hedging and speculation on the futures market, according to Vince Boddicker, manager of Farmers Trading Co. of Mitchell.
“The farming community in general … heard the horror stories of their neighbor that used the futures market and lost their farm,” said Boddicker. “It never happened to someone who was hedging. It happened to someone who was speculating.”
It was just one piece of advice distributed to those in attendance at the first agricultural forum of the 2009 Dakotafest Tuesday. More than 55 people attended the free event in the First National Bank South Dakota Pavilion to hear from Boddicker, Brian Hoops, president of Midwest Marketing Solutions; Keith Mockler, Monsanto agronomist; and Jerry Warmann, SDSU Extension Economist.
Dakotafest, held on the Schlaffman property on the southeast edge of Mitchell, kicked off its three-day run with large crowds that pleased Todd Benz, of Cygnus Farms, which manages Dakotafest.
“Right now, it appears that attendance is absolutely excellent,” Benz said. “The west lot is packed. It’s looking good.”
Benz did not have an official headcount for Day 1. That likely will be available today, he said.
Farmers, ranchers and generally anyone with an interest in agriculture crowded Dakotafest’s streets on a day that featured temperatures around 78. The conditions made for a pleasant morning and afternoon, and especially in the First National Bank South Dakota Pavilion.
At the morning forum — the first of two forums Tuesday — Hoops said the key to maximizing profitability in today’s agricultural economy is simple: risk management.
While input costs are increasing, so are yields, Hoops said. Combine those factors with a consistent evolution in agricultural technology and it becomes clear that risk management is more important than ever.
“You really have to be able to use either the options market or the insurance products available,” Hoops said. “People who manage their risks will be the ones who will be farming five and 10 years down the road.”
Mockler agreed that technology continues to advance and he encourages producers to embrace it as much as possible.
“It’s just going to make it more profitable in the long run,” Mockler said. “I know a lot of that stuff looks expensive on the front side, but the market has shown us that the technology is where the profit is at.”
Embracing technology is just part of planning for a big yield. It’s a mindset Mockler, whose employer produces hybrid seeds, believes all producers should have, even if it means spending extra money at first.
“We’ve got this somewhat shaky market, but the one thing you guys have the most control over is the yield,” Mockler said. “I know input costs are high, but don’t try to save $2 and end up losing $30 or $40.”
Sitting at the end of the table, Warmann agreed with the advice of his colleagues.
A producer can never be too informed, Warmann said, and should be open to advice from many different sources.
“(Be) analytical in your decision making,” Warmann said. “(Get) advice from marketing or risk management professionals and (use) the collective wisdom in the family operation to make the best possible decision.”
A second forum was held later in the day, titled “Wealth Preservation, Management and Transfer Techniques.”
In addition to the 10 a.m. forum with Rep. Stephanie Herseth Sandlin, D-S.D., and Sen. John Thune, R-S.D., at the First National Bank South Dakota Pavilion, other events scheduled for today include:
• 10 a.m.: Dakotafest Women’s Brunch featuring “Plain” Jane Green at the Highland Conference Center.
• 10 a.m. – 4 p.m.: Ride-NDrive Demos on the east side of the show grounds.
• 10:30 a.m.: Livestock Chute Demo at the Livestock Demo Tent on the west side of the grounds.
• 11:30 a.m.: “Safety … Overlooked?” horse training demo by Phil Rogers in the northwest corner of the show grounds.
• 12:45 p.m.: Complimentary South Dakota State University Ice Cream in the First National Bank South Dakota Pavilion.
• 2 p.m.: Livestock Chute Demo at the Livestock Demo Tent on the west side of the grounds.
• 2:30 p.m.: “Collecting With Softness” horse training demo by Phil Rogers in the northwest corner of the show grounds.