Market Information Key to Minimize Buyer Price Undercutting
By Mike Schulist
In organic markets, we have seen the 2019 poor-quality crops lead to poor 2020 prices, but the floor may be here. Some buyers have told me they were covered with their grain needs this year, only to call a month later needing grain immediately. This is somewhat understandable, because 2019 poor test weight corn was consumed at a quicker rate than heavy test corn.
However, despite the demand, downward pressure from buyers remains. Organic egg producers say they cannot afford to pay more for corn and beans, because egg prices continue to slip lower. For many years now, the organic industry has preached its need for more farmers. Are these weak prices the results of over-production? I have asked many organic grain buyers why the price of corn is declining. The response is consistent, too much organic corn.
As your organic grain representative, I am in the market daily, searching for fair prices, rewarding buyers who offer them and just saying no to low-ball offers. As we look forward to next year’s rotation, plan to be diverse in your crop plan. If that means planting fewer corn acres because of the corn expense, keep in mind those other crops may yield less, but may cost less to grow as well.
Over the years, agribusiness has done a great job of getting farmers to compete against each other. Agribusiness and farmers themselves have undercut each other to get the sale done, which is not a good practice. Undercutting each other has resulted in weaker prices for farmers, but not for agribusiness. Market information is key in ending the undercut pricing. We can change the direction of the current organic grain market if we work together and share our marketing information for the benefit of National Farmers members.
Hopefully, you had a healthy and safe 2020 harvest. Stay safe in the new year.