10 reasons to put your wheat in the pool

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all grain farmers know the importance of spreading out your risk in the markets. When making your marketing plan for wheat this year, consider the following 10 reasons for putting a portion of your crop into the Grain Farmers of Ontario pool.

10. The pooling program is unique to grain farmers of ontario in Ontario
No other grain company in Ontario has a government guaranteed pooling program. Although Grain Farmers of Ontario can’t compete with sales calls and bundling of inputs, our competitive advantage is our unique program.

9. Benefit from high volume markets even if you’re a small producer
When it comes to selling commodities, larger quantities can command better prices. The Grain Farmers of Ontario wheat marketing department is often able to obtain premiums for large quantities on behalf of our members.

8. At grain farmers of ontario, 14.5 percent is considered dry wheat
Recently, some grain companies in Ontario are moving to 14 or 13.5 percent standard moisture for dry wheat. The shift is in response to market demands.

At Grain Farmers of Ontario, we will maintain 14.5 percent as dry for the foreseeable future. When selling wheat into markets that require a lower moisture standard, we will incur the costs to participate to ensure farmers are benefitting from the best
marketing opportunities.

7. Putting wheat in the pool spreads out your risk
“Don’t put all your eggs in one basket,” is a common saying that holds a lot of weight when it comes to marketing commodities. The pool is a great way to avoid traditional marketing channels and spread around your business with more than one company. This option can open up your crop to more markets than localized companies can offer.

6. The pool is hands off
The pool is a great option for farmers who aren’t too keen on spending their time analyzing markets and weighing selling options. As a hands off marketing alternative, the pool allows farmers to hand the responsibility of getting a good price over to Grain Farmers of Ontario.

5. We work for you
Grain Farmers of Ontario’s marketing department’s mandate is to maximize returns to farmers while covering our costs. Grain Farmers of Ontario is a not-for-profit organization and we work for farmers. Through our election and resolution processes, farmers have the power to make changes to Grain Farmers of Ontario’s activities and direction.

4. Your local elevators are our agents and can handle grain farmers of ontario wheat
Many farmers have a close relationship with their elevator and a common concern is that by putting your wheat in the pool, you are denying your elevator revenue. But, our agents are important partners with Grain Farmers of Ontario and they set their own handling charge at a level that is acceptable to them. Keep in mind, the handling charge is set by the agent and it can be negotiable.

3. Should the market price fall below the initial payment, you would still be guaranteed the initial price
In 2009, pool C market prices fell below the $173 per metric tonne initial price in September. In this situations, farmers who had wheat in the pool ended up doing better than that but for a period of time, this initial price acted as a floor price for the entire market. Grain Farmers of Ontario works closely with government prior to   harvest to get the initial price set at a reasonable level.

2. You don’t have to commit to the pool until you know what you have
The pool is open until September 30 allowing farmers to “wait and see” what they have. Contractual obligations can be fulfilled before the remainder is put in the pool and quality is not a concern as the wheat will be directed to the appropriate pool. There are no minimum or
maximum requirements.

1. Pool returns versus cash price over the same period (July to December) have been higher for five out of the past seven years
The wheat marketing department at Grain Farmers of Ontario recently analyzed post-harvest marketing options to determine what the best options are for growers with unsold grain at harvest. For grain that has not been forward contracted, there are three options: harvest sale, store to sell later, or put it in the pool.

Looking at these three options since 2003, Grain Farmers of Ontario has determined that in five of the past seven years, the pool was the best option versus the average harvest or post-harvest price, when a storage fee of seven cents per tonne per day is factored in.

Consider these factors when you plan your marketing for this year’s wheat crop. The pool shouldn’t be considered an option of last resort when prices are low, but a part of a risk management strategy.•