Agrimarket

A few tips from our Grainbow experts

Increase your market share

Whether it’s conventional products like wheat, corn, rapeseed or organic products, the importance of volume is crucial. By increasing your volume, you can spread out your fixed costs and thus increase your margins and profits. Making your crop process more efficient with IT solutions such as a mobile E-crop application is therefore essential.

Adopt an attractive sales policy

It’s one thing to have the operational capacity to buy large volumes, but you also need to attract farmers and encourage them to sell you grain. Farmers are increasingly well-informed, following commodity markets such as MATIF, and keen to benefit from price rises in increasingly volatile markets. Farmers are no longer spectators, they are actors. These days, the farmgate price is gaining ground over the campaign price. More and more cooperatives are offering Euronext-indexed firm prices via a web interface or mobile application. In an increasingly competitive environment, your sales policy needs to be diverse: farmgate prices, target prices, commitment offers, differentiated base purchases, option offers (CALL/PUT) ….

Integrate transport costs

It’s also important to have a sales policy that adapts to the economic context, and to transport costs. Cooperatives classify their farmers by group, and many do so geographically, to assign transport parities. In this way, they can vary their purchase offers according to certain characteristics (farm storage/silo delivery, for example). Fuel prices are becoming ever more volatile, and this notion of transport needs to be considered in your sales policy.

Keep in mind that markets are volatile, but so are farmers

It’s important to offer them a quality service that stands out from the competition. Today, it’s possible to offer your farmers a white-label mobile application. An application in your name, downloadable from Apple Store and Play Store. Where the farmer can contract, but also benefit from a range of services. From a commercial point of view, it’s worth proposing quality content on an application aimed at farmers, to encourage them to use it regularly. Many cooperatives offer market information to their farmers, including EURONEXT 15-minute delayed, a weather service, and Decision Support Tools (DST). Beyond the commercial aspect, offering an additional service helps to cultivate solid relationships with farmers.
Once market share has been acquired, maintaining margins is essential. Following the purchase of grains and oilseeds, most players in the agricultural sector (cooperatives, traders, manufacturers, millers, etc.) hedge on the stock markets (Matif or CBOT). Hedging is carried out via a futures broker and enables you to secure your price and margin. Hedging can be done manually (by calling your broker) or automatically with what’s known as order routing (automatic order placement via a DMA).

Don’t forget the hidden costs

First and foremost, the administrative side of the business. Documents such as grain contracts, delivery notes, invoices, and contribution statements. Having a document portal with an electronic signature system and a trusted third party saves an enormous amount of time. It’s also important to have an interfaced IT system, as contracting on an application to be re-entered into an ERP represents a considerable waste of time. There’s also the legal aspect, with many cooperatives and trading companies chasing signatures every year. In an increasingly volatile market, farmers may be tempted not to honor their contracts…

In parallel to these various actions, it is necessary to

Keep abreast of the grain and oilseed market in real time

Optimize sales management

Monitor performance indicators