Evaluating Performance of Common Ohio Grain Marketing Plans

Joel Shoup
Category: 
Undergraduate (Social Sciences)
Advisor: 
Ben Brown
Department: 
Agricultural, Environmental, and Development Economics
Abstract: 

Agriculture exists in three cycles: boom, bust, and steady. The period from 2014-2017 can best be described as steady- where prices for major agricultural commodities consolidated at the long run cost of production. The three years following 2017 have been turbulent, causing many agricultural producers to experience tight margins. As profit margins narrowed, producers began to focus on ways to improve their operation's revenue. There are two primary methods through which this can be achieved - these include managing the intensive and extensive margin. While the extensive margin attempts to increase the overall number of bushels produced, the intensive margin attempts to increase the revenue received per bushel. This study identifies patterns in the performance and consistency of 10 grain marketing strategies when compared to the baseline of selling the entire crop at harvest. Two crops are analyzed: corn and soybeans.

The results of this study will address our fundamental question: Can Ohio grain producers improve intensive crop revenue through the utilization of grain marketing strategies in their risk management plans? For this study to benefit Ohio producers, it must satisfy the following goals:
Analyze the performance of 10 different grain marketing plans against the baseline of harvest selling and
Disseminate these results to Ohio producers and provide farmers with the necessary information to formulate an effective grain marketing plan for their operations

By achieving these goals, this study is able to better equip Ohio grain producers in the formation of grain marketing plans to manage risk and improve profitability. The results of this empirical study found producers should consider both early season grain marketing as well as manage futures and basis prices in separate plans to optimize risk management.