1. Farm Transactions
AG BM 102

2. Coffee Market Article in NY Times Farm price – 24 cents per pound
Retail price - $3.60 per pound
Processors – Kraft, Sara Lee, Proctor & Gamble, Nestle – have half of market
Annual exports have fallen $4 bil. since 1997, since end of coffee agreements

3. Coffee 660 mil. lbs of low quality beans in storage
Estimated destroying these would increase farm revenues by $750 million
Big firms not interested & don’t want International Coffee Organization (exporting group) to interfere

4. Farm Inputs

5. Introduction Modern agriculture involves lots of purchased inputs
Machinery, equipment, fertilizer, chemicals, fuel, seed, semen, feed, credit
The input industry is part of the system
Often a very integrated part

6. Wenger Feeds Sells feed for broilers, eggs, and hogs
Thousands of formulations
Works with producer to solve problems – shell strength
Big customer base – lots of deliveries – 24 hours per day
Can’t let anyone run out of feed

7. Wenger Feeds
Limited storage space – need to schedule corn and other raw material deliveries well – a couple days of corn
Rail or truck?
New sites

9. In General, Input supplier
Works with farmer to help farmer succeed
Provides advice
Lots of service
Not like supermarket – choose, buy, & leave
Tries to have flow of business

10. Employs PSU Grads Fertilizer Pesticides Feed Pharmaceutical products
Credit
Lots more

11. Need College Grads Technical issues Integration of lots of factors
Need to be able to understand company’s research
Work within system

12. Integration Contracts tie inputs to outputs Chickens, hogs, vegetables
Food safety requirements for drugs, sprays, etc.

13. Coops in Farm Supply Long history Spatial monopoly Some have done well
Others struggled
Agway, Farmland
Very competitive – success requires good management & efficient operation
Usually ease of entry

14. Other Comments About Input Markets
Quality of output related to use of inputs
Quality, timing, appropriateness
Advice can be a big factor here
Farm services – milk testing, feed testing
No farmer stands alone!
Also, without farmers no input industry – can’t pursue strategy of getting rich at farmer’s expense

15. Other Comments About Input Markets
Small farmers at a disadvantage here
However, most farmers small compared to seller
Higher input costs make it harder to compete
Doing a good job here can really help profitability

16. Farm Outputs

17. Introduction You have produced the product – now what?
How much is it worth?
How can you get the most for it?
What are your choices?
I hope you have thought about this before

18. How much is it worth? How do you get the price? Lancaster Farming
Internet
Calling known markets
Talk to your neighbors
Futures markets

19. Ayrshire Auction

20. What is your quality? All corn, milk, cattle, and apples are not alike
Some get premiums, some get discounts
How much are the premiums and discounts?
How can you move up a step?
What will it cost you?
Is it worth it? Premium vs. costs

21. How can you get the most for it?
Consider several alternatives
Work out math – hauling fees, charges & commissions, time
Is a bit more worth souring a relationship?

22. What are your choices?
Locally
In general area
Neighboring states

23. Plan Ahead
Should have a market in mind when decision to produce is made – and have talked to them
Can change mind
Is a contract possible? Worthwhile? Essential?
Market identification essential for unusual things – Agriculture Alternatives

24. Marketing for small farms
Market access a particular problem
Also costs per unit are higher – less than truckload lots
Often need to go through auctions – prices may be lower
Pool with neighbors if others raise the same thing

25. Leola Produce Auction

26. Direct Marketing

27. Tuscarora Organic Growers
Jim Crawford – southern Huntingdon County – Organic vegetables
Sold at site in Baltimore – marketing was taking a lot of time – limit to what market could absorb
Joined forces with other growers
Formed cooperative

28. TOG Plan production – deliver to staging point
Cooperative sells in Washington – develops market
Members keep traditional clients & markets
Cooperative broadens customer base

29. Market Access in Serbia

33. Farmer Transactions Often few choices Usually no market power
Direct sales to consumer rarely feasible
Information essential
Planning ahead important
Understand your alternatives