Where is grain sold?

I must thank @DylanBisch for asking a me question that inspired this post.  

When my wife and I visit friends in urban areas they are ofter marvelled by just how much grain a farm produces and a very common question arrises, Who do you sell it to?  A very simple questions but there is no simple answer.  Without going into the complexities of how to market grains, i hope to shed a little light on how its sold.

I will simplify this process by grouping two sale classifications, sell before delivery and sell after delivery.  Many farms choose not to or don't have the facilities to store grain on the farm.  In this case at harvest the grain will be delivered, usually to a local elevator, and sold immediately or they pay for storage and sell at a later date.  If sold at a later date, the farmer is for all practical purposed limited to sell it to that elevator.  Around this area there is a lot of choice in this matter.  We have Cargil, Thompsons, Agris co-operative, and Southwest Ag.  These companies also provide the supply of crop inputs such as fertilizers and pesticides and many other services.  Most farmers will have built up relationships with these companies.

When the grain is held on the farm, there are often more choices of who to sell your crop to.  Many end users will deal directly with the farmer and at time of harvest can only take so much grain, but later in the year will offer premium prices.  But it is up to the farmer to find these end users.  When selling direct, the point of sale is often at the end users facility, which means the farmer needs to transport the grain to them.  When selling to the elevator, the point of sale is the farm yard, so the farmer only needs to load the truck.

This year is my first corn crop, so i am just starting to get familiar with the options for this grain.  Nearby are two big users of corn, commercial alcohol and Hiram Walkers.  But there are also many small users such as cattle farms looking for feed.  Grain quality can have a big impact on who you can sell to, and often there are some very impressive price premiums.  As if the risk of growing and harvesting a crop weren't enough, storing and marketing grain can make money and can cost money.  A wind storm can tear off part of a roof and tons of grain can be spoilt.  It is very important to continuously inspect stored grain, it surprising how fast a few moths can destroy a good wheat harvest.  And there is no guarantee that price will rise, and often, like last week it can fall very fast.

I have no doubt if you ask 20 farmers where they sell there grain, you will get several answers, some are very skilled at finding the end users and others are very happy to take the lower price at the elevator and enjoy the simplicity of being able to sell with a single phone call.  There is no right or wrong place to sell, and I expect to do a bit of everything over time.

Now for other products it can be far less cold of a sales relationship.  The eggs from our free range chickens aren't marketed at all, and only sold to friends and acquaintances.  In this type of sale you often have a good chat or even a cup of coffee with the end user.  Granted egg sales don't even come close to the feed costs, but the chickens are not expected to drive our income in our case, but thats a blog for another day.