Expert strategies and tips that still hold true today
Through the years, the Top Producer team has crisscrossed the nation and traversed the globe to bring fresh perspectives, new ideas and expert advice to your farm’s kitchen table. News has ranged from the financial crisis of the 1980s to explaining how puts and options work when they were first made available as a marketing tool. Our experts have delved into farming’s best business practices and analyzed market moves. In celebration of the magazine’s 30th anniversary, here’s a review of some of the advice found in early issues of Top Producer that have withstood the test of time.
January 1984. Don’t react to 1984 based on what you learned in 1983. Instead, consider the possibility of another 1981–it followed a drought year, too. The drought year was last year. This year, we could see big acreage, big crops and falling prices, cautioned John Marten, former Farm Journal economist. "With normal weather, I look for 1984/85 corn prices to average 50¢ below 1983/84; soybeans, $1 lower; wheat and cotton about steady," he said. In a drought year like 1983, forward selling doesn’t pay off as expected. But in 1981 it paid handsomely. Use risk management techniques–figuring the odds for and against two drought years in a row–to decide where you want to lay your bets this year.
January 1987. "Without discipline, the rest is meaningless," said Ron Frost, former vice president of the Chicago Mercantile Exchange. "That is the most important reason for losing in commodity markets," he said. The following tactics are basic for marketing discipline:
D Determine what your profit objective is and what your loss limit is.
I Investigate new trading techniques and tactics like the ones in this book.
S Set your priorities before making a trade.
C Concentrate on the market signals.
I Intelligently apply your rules of trading.
P Plan your trade and trade your plan.
L Learn to make decisions without always second-guessing yourself.
I Isolate yourself from the crowd.
N Never look for excuses or anyone else to blame.
E Execute your plan. Goals are dreams that are acted upon.
August/September 1993. Farm families get into trouble when they fail to clearly communicate whether money is a loan or a gift. Make the loan as a loan officer would, suggested Dick Wittman, Culdesac, Idaho, farmer and financial consultant. That means a formal promissory note that outlines the interest rate, a specific repayment schedule and a description of the collateral. A formal agreement puts pressure on the borrower to repay and proves that the transaction is not a gift. You can’t go wrong if you stick to business.
January 1994. In futures trading, you absorb all the price change that occurs while you hold the contract. With options, the only thing you risk is the initial cost of the option, called the premium. Staying power is perhaps the most salient difference between options and futures contracts. No matter how far the market moves against your position, you can hold the option in anticipation of an eventual turnaround that will make your position profitable.
Who will write ag options? "It will generally be those holding large inventories of grain such as grain companies," stated Kalo Hineman, former chairman, Ag Options Advisory Committee. "I suspect if options get going firms will emerge–not unlike insurance companies–that take the other side of these trades for the premiums."
November 1999. If your plan fails to perform, look to fix it, not scrap it. "If your corn planter skips a row, you don’t throw it away—you tweak it," said Iowa farmer Dave Lubben. "The same is true of your marketing plan. Each year you adjust it with the ebb and flow of the markets."
Top Producer online goes back to 2008. To reminisce about the past 30 years, flip through
previous issues or check out our memorable covers at www.TopProducer-Online.com/30_Covers.
- Spring 2013