Years ago I dove headfirst into personal finance and retirement investing. I found a few bloggers I liked (shoutout to @madfientist), and after a month of reading and research, I felt like I knew 20% of the inputs in the scary world of investing that would set me on a retirement investing trajectory yielding 80% of the results — the Pareto Principle.
When people ask me:
“I don’t want to think about investing, I just want the money to be there one day when it’s time to retire.”
My response is always — it’s easier than you think. With a couple days of time investment, you can put the next 30+ of investment on auto-pilot and do better than 80% of your peers. I believe this to my core.
But I’m not here to belabor retirement investing principles or strategies (but if I’ve piqued your interest, digest this graphic and this graphic and you’ll be solidly on your way!), I’m here to learn alongside farmers, marketers, grain merchandisers, advisors, grain elevators, brokers how to make grain marketing more approachable.
Okay, not quite yet…one last analogy with personal finance. The second graphic above is an initially overwhelming flowchart — it hurts my brain (not unlike grain marketing) — until you zoom in and focus on the core principles.
The beauty of a flowchart is that you must do one thing before you do the other — this is what makes it digestible. For example, in the image below, it’s prudent that you create a budget before you take on a certain rent/mortgage. And it’s prudent that you are able to meet that basic need of shelter before you splurge on groceries. And so on and so forth.
I like to refer to the beginnings of these flow diagrams as first principles — the pillars or foundations of personal finance, if you will. And they don’t have to be so obvious or mundane as the ones above! For example, one of the first principles in retirement investing is using low-cost index funds — avoid high expense ratios!
This simple tool helps to illustrate the drag of high expense ratios on your retirement portfolio.
Okay — end personal finance — enter grain marketing. My point in the above, is that there exists analogs in grain marketing to those first principles in the personal finance. Let’s illustrate a couple that @gordo701 and I riffed on:
Personal finance tenant: spend less than you make
Grain marketing tenant: don't sell just at harvest (@PhilWCC)
Personal finance tenant -- pay off high interest debt first
Grain marketing tenant -- sell the carry (@WhiteCommercial)
They’re not direct analogs — that’s not the point I’m trying to make. The point is they’re all relatively simple things within your control as a grain marketer that have a huge impact on your bottom line!
Farming wheat? Sell the carry a year in advance for 80 cents per bushel — or $52 per acre at a yield of 65bu/ac!
The carry exists in other row crops as well. See my post Demystifying Contango and Backwardation to understand how to identify opportunities to sell the carry and Short on bushels - what are your options? to be a more confident forward contractor.
Okay…so this is the Prelude. I’m not here to lay out 20 first principles of grain marketing. But let’s start riffing and get the conversation rolling. Other’s in the space have already done a great job.
What are some grain marketing first principles?
Again…the prelude…but let’s unpack one — Hauling isn’t Free!
It’s no secret that hauling grain 10 miles versus 60 miles have different cost of transportation and impact the net price you’re receiving — but sometimes it can pay off to haul!
What tools do you use to evaluate freight-adjustment in evaluating where to haul your grain?
What’s the furthest you’ve driven to get a good price?
Would you take the 64 mile elevator over the 24 mile elevator pick for an extra 2 cents per bushel?