1. Copyright © 2002 Center for Farm Financial Management, University of Minnesota

2. WORKSHOP THEME " Pre-harvest marketing pays and crop insurance is the tool that allows you to do it with comfort "

3. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Agenda 4Introduction 4Playing The Game 4Seasonality of Grain Markets 4Impact of Crop Insurance Decisions 4Results of The Game

4. Copyright © 2002 Center for Farm Financial Management, University of Minnesota 41999-00 Original game and workshop concept were developed by Roger Selley & Doug Jose, University of Nebraska. 42000-01 Winning the Game (soybeans) delivered in Minnesota, 5 regional & 19 local workshops History

5. Copyright © 2002 Center for Farm Financial Management, University of Minnesota 42001-02 Minnesota -- 58 workshops with 1856 participants, used sponsor model 42002-03 Country Hedging – 47 workshops with 1,500 participants (OH, IN, MO, CO, KS, OK, WI), U of MN team presents at Commodity Classic. Nebraska uses sponsor model for 25+ meetings. History

6. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Your Farm for the Game 4You have a 1200 acre farm with 600 acres you plan to plant to corn 4You have very limited on-farm storage available for corn.

7. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Your Yield History 41984129 41985171 41986191 41987139 4198877 41989177 41990154 41991134 41992167 4199356 (ouch) 41994139 41995131 41996126 41997155 41998173 41999166 42000139

8. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Crop Insurance 4The crop insurance agent for the game has only one choice for insurance -- 70% CRC with the 100% price election at $2.59/bu. 4The APH (proven yield) for crop insurance is 140 bu. 4It is available for $8.05 per acre

9. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Playing the Game 4Opportunity to forward contract corn during a pre-harvest season 4Nine opportunities to sell from the first week of April through the last week in July in two week intervals 4Any corn that is not forward contracted will be sold at harvest

10. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Playing the Game Forward Pricing for Harvest Delivery Name CRC? YesNo (Circle one) ID#99 WeekDate 14-Apr____,000 bu @$/bu Forward Pricing for Harvest Delivery Name WeekDate ID#99 218-Apr____,000 bu @$/bu

11. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Playing the Game 4You must turn in an input each time even if you are not selling anything 4We will provide a brief market update before each marketing decision

12. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Ready to start the game?

13. Copyright © 2002 Center for Farm Financial Management, University of Minnesota 3:00 The First Decision 4Find your input sheet 4Decide whether to purchase CRC insurance or not. Please circle yes or no 4You have 3 minutes 2:00 1:000:100:00

14. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Market Report - April 4 One advisory service indicates corn can continue higher as long as the market is trading anything short of an ideal growing season. Current corn planting intentions show a 1.4 million acreage decline from February numbers, but still up 1.9 million from the previous year. Corn belt weather was wet last month but is forecast to be ideal this month. Current forward contract price is $ 2.09 /bu.

15. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Seasonality of Grain Markets

16. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Marketing is Important! 4 Iowa State University studies show that since 1998 the average Iowa farm has earned 20-30 cents/bushel (including gov’t payments). 4 Marketing strategies that increase the net price received by just 10 cents per bushel could increase net income by 33-50%!! We get there by eliminating mistakes! A Different Approach to Marketing

17. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Pre-harvest marketing is very important!! On average, the March to May time period offers good forward pricing opportunities. Crop insurance allows us to forward price with confidence. Your local loan rate establishes a minimum forward pricing objective. A Different Approach to Marketing

18. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Year1-May1-OctChange 19802.953.490.54 19813.772.87(0.90) 19822.932.20(0.73) 19833.033.530.50 19843.042.78(0.26) 19852.642.26(0.39) 19862.041.77(0.27) 19871.871.84(0.03) 19882.272.950.68 19892.642.39(0.26) 19902.702.29(0.42) 19912.532.540.01 19922.532.12(0.41) 19932.43 0.00 19942.582.14(0.44) 19952.633.110.48 19963.332.90(0.44) 19972.762.56(0.20) 19982.622.05(0.58) 19992.312.05(0.26) 20002.621.99(0.63) 20012.272.11(0.16) 20022.20 2.56 0.36 Ave.2.642.47(0.17) December Corn, 1980-2002 16 years (70%) the market declined, an average of 40 cents/bu. 7 years (30%) the market improved, an average of 37 cents/bu.

19. Copyright © 2002 Center for Farm Financial Management, University of Minnesota But remember your minimum price….

20. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Winning the Game Some thoughts on post-harvest marketing The tendency for cash grain prices to rise after harvest is a basis phenomena, and not due to a “bias” in the futures price. Post-harvest futures direction is a coin toss. The only way to capture the carry at harvest is to sell the carry, using some form of a forward contract. The 11 th Commandment

21. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Impact of Crop Insurance Decisions

22. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Life Insurance 4How many of you have life insurance? 4Do you hope to collect on your insurance this year?

23. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Health Insurance 4How many of you have health insurance? 4Do you have the best insurance money can buy? 4What if the government paid part of the premium?

24. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Crop Insurance 4Crop insurance is like health insurance for your crops. 4The better the policy coverage, the lower the deductible, the higher the premium. 4Unlike health insurance, the government pays a portion of your crop insurance premium.

25. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Crop Insurance Subsidy Percent Insurance Coverage 50 55 60 65 70 75 80 85 2000 Subsidy% 55 46 38 42 32 24 17 13 2001-2003 Subsidy% 67 64 59 55 48 38

26. Copyright © 2002 Center for Farm Financial Management, University of Minnesota

30. WORKSHOP THEME " Pre-harvest marketing pays and crop insurance is the tool that allows you to do it with comfort "

31. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Evaluation 2001-02 Do you plan to make changes in your crop insurance coverage as a result of what you learned today? 25%Yes 43.8Confirmed what I’m doing 31.2Don’t know, will evaluate 96.4% of the survey participants indicated they were planning to forward contract more grain.

32. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Evaluation 2001-02 Average % Forward Priced Corn Soybeans Previous Max22.5%9.4% New Expected Max55.6%52.1% Increase33.1%34.6%

33. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Follow-up Evaluation 2001-02 % Actually Forward Priced Corn Soybeans 2001 Crop Max16.1%9.4% 2002 Crop Max43.7%33.6% Increase27.6%24.2%

34. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Sponsor Model 4Sponsor responsiblities: Provide the location/facilities Provide eats and treats Promote the workshop locally Pay the University $400 4University responsiblities: Provide promotion materials to sponsor Present the workshop Provide the participant materials

35. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Sponsor Model -- Advantages 4Reduced transaction costs on income 4Local presence for promotion, advertising & partnership 4Eliminates local meeting arrangements 4Lower financial risk with low turn out 4Cover direct program costs – travel, printing, etc. 4Pressure on presenters to deliver quality program

36. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Sponsor Model – Requirements for Success 4Requires a quality program – name recognition helps 4Aggressive promotion to potential sponsors 4Provide sponsors with promotional tools 4Make sure sponsors understand their responsibility 4Assist with statewide promotion

37. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Sponsor Model – Challenges 4Private vs. public meetings 4Logistics of sponsor care – promotion, billing, follow-up

38. Copyright © 2002 Center for Farm Financial Management, University of Minnesota Reasons for Success 4Simple message 4Fun game 4Well packaged turn-key program 4Broad support from commodity organizations 4Good teaching teams