Diane Hanekamp, Strategic Marketing Manager for FamilyFarms Group, discusses practical considerations when pricing your crops as well as why having a private Resource in the grain sales arena is just a tiny part of the assets that FamilyFarms Group shares with its members. As you begin to finalize your planting intentions for the 2014 crop year, there are some practical considerations on the subject of crop sales, over and above how you feel about price direction. These considerations are not complete and may not be appropriate for every producer, however, they come up time and time again as considerations that should be made, and are sometimes forgotten.

1. PRACTICAL CONSIDERATIONS
WHEN PRICINGYOUR CROPS
Strategic Marketing Resource
Diane Hanekamp

2. CONSIDERATION #1
Know your own individual marketing
objectives, put into a written sales
plan.

3. Hover Here For Directions
Acres 3,500 Acres 3,500 Total Acres 7,000
Yield 172 Yield 48 Weighted Avg Combined Yield 110
Bushels 602,000 Bushels 168,000 Total Bushels 770,000
Expense Total PerAcre Total PerAcre Combined Totals Per Acre
Cash Rent 717,500$ 205.00$ 717,500$ 205.00$ 1,435,000$ 205.00$
Seed 425,000$ 121.43$ 280,000$ 80.00$ 705,000$ 100.71$
Nitrogen 630,000$ 180.00$ -$ -$ 630,000$ 90.00$
Fertilizer 227,500$ 65.00$ 122,500$ 35.00$ 350,000$ 50.00$
Insecticide 32,000$ 9.14$ 22,000$ 6.29$ 54,000$ 7.71$
Fungicide 38,000$ 10.86$ 7,200$ 2.06$ 45,200$ 6.46$
Crop Insurance 175,000$ 50.00$ 122,500$ 35.00$ 297,500$ 42.50$
TotalDirectCosts 641.43$ 3.73$ 363.34$ 7.57$ 1,271,700$ 502.39
Machinery 300,000$ 85.71$ 300,000$ 85.71$ 600,000$ 85.71$
Repairs 22,000$ 6.29$ 22,000$ 6.29$ 44,000$ 6.29$
Fuel 78,020$ 22.29$ 62,000$ 17.71$ 140,020$ 20.00$
Depreciation 98,000$ 28.00$ 98,000$ 28.00$ 196,000$ 28.00$
Hired Labor 58,500$ 16.71$ 22,480$ 6.42$ 80,980$ 11.57$
Drying 44,000$ 12.57$ -$ -$ 44,000$ 6.29$
Storage -$ -$ -$ -$ -$ -$
Utilities 5,775$ 1.65$ 5,775$ 1.65$ 11,550$ 1.65$
Interest 33,325$ 9.52$ 33,325$ 9.52$ 66,650$ 9.52$
Family Living 48,000$ 13.71$ 32,500$ 9.29$ 80,500$ 11.50$
G & A Expense 30,000$ 8.57$ 30,000$ 8.57$ 60,000$ 8.57$
Operating Interest 53,725$ 15.35$ 53,725$ 15.35$ 107,450$ 15.35$
Long Term Debt 40,297$ 11.51$ 40,297$ 11.51$ 80,594$ 11.51$
Asset Growth & Risk 50,000$ 14.29$ 50,000$ 14.29$ 100,000$ 14.29$
Hedge Expense -$ -$ -$ -$ -$ -$
Other -$ -$ -$ -$ -$ -$
Other -$ -$ -$ -$ -$ -$
Other -$ -$ -$ -$ -$ -$
Other -$ -$ -$ -$ -$ -$
Total Non-Direct Costs 246.18$ 1.43$ 214.31$ 4.46$ 1,611,744$ 230.25$
Profit Goal 35,000$ 10.00$ 0.06$ 35,000$ 10.00$ 0.21$ 70,000$ 10.00$
Government Payments 61,250$ 17.50$ 36,075$ 10.31$ 97,325$
Crop Ins Payment -$ -$ -$
Grain Premiums 200,000$ 57.14$ 0.33$ 150,000$ 42.86$ 0.89$ 350,000$
Cost of Production 822.97$ 4.78$ COP 534.49$ 11.14$ Combined COP 1,357.46$
Necessary Revenue 2,880,392$ 1,870,727$ 4,751,119$
Big SkyFarms
2014BreakEven -Projections
2014 Corn 2014 Beans DoublecheckTotalsperacre
RISK DISCLOSURE: This data and these comments are provided for
informationpurposes only and are not intended to be used for specific trading
strategies. Commodity trading is risky and FamilyFarmsGroup assumes no
liabilityfor the use of any information contained herein. Althoughall
informationis believed to be reliable, we cannot guarantee its accuracy and
completeness. Past financial results are not necessarily indicative of future
performance. Any examples given are strictly hypothetical and no
representation is being made that any person will or is likely to achieve profits
or losses similar to those examples. References to and discussions of exchange
traded products are made solely on behalf of FamilyFarmsGroup.

4. CONSIDERATION #2
Pricing grain that must move at
Harvest because of on-farm
storage deficits

5. 33%
CORN SEASONAL
DECEMBER FUTURES

6. 33%
SOYBEAN SEASONAL
NOVEMBER FUTURES

7. CONSIDERATION #3
Opportunities to mitigate storage deficits
&
Opportunities to add value to stored grain

8. STORAGE DEFICITS
• Average US on-farm storage
is 45% to 55% of average
annual crop production
• For many producers, some
volume of Harvest Delivery
must occur, no matter the
price

9. CONSIDERATION #4
Negotiation of advantageous
scale of discounts

10. GRAIN DISCOUNT SCHEDULES
Examples of how small changes to the Moisture Discount can
be to your advantage:
Either a higher allowable moisture at no discount (example: 15.5% allowed instead of 15%)
or
Easier per-bushel discount for moisture above allowable limit
(example: $.05 per 1/2% instead of standard $.075 per 1/2%)
or
Easier shrink and drying assessments
(example: 1.4% shrink per % above allowed moisture, assessed on 1/10% increments plus $.01 drying fee per %)
or
Averaging each day's loads and assessing one discount on all
(knocks out the highs and brings value to the loads you deliver below the allowable moisture)

11. CONSIDERATION #5
Delivery proceeds and
cash flow:
Match revenues with cash flow needs

12. CONSIDERATION #6
Maximizing basis
(or at least not pricing during seasonal basis lows)

13. KNOW AND CHARTYOUR BASIS
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0
0.1
0.2
0.3
1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep
Dlvd Basis

14. RECAP
.

15. BE MINDFUL OF
Individual Breakevens
Storage Capacity
Premium Opportunities
Delivery Points & Policies
Cash Flow Needs
Typical Sales Contract Amounts
Maximizing Basis

16. LASTWORD
.

17. ASPECTS OF WORKING
ONYOUR OWN
 Review/Update plan regularly (2x Month)
 Communicate plan to partners/financial staff
 Become comfortable with the idea of making decisions with
incomplete data
 The benefit of hindsight does not mean a decision was incorrect
 In fact, hindsight can help you be aware of when to adjust
 Beware of “paralysis by analysis” & “multiple market opinion
handcuffs”
 It’s OK to be wrong, it’s NOT OK to stay wrong!

18. IT’S ALWAYS GOODTO HAVE 2
SETS OF EYES
You never
know what
you’ll miss!

19. THANKYOU
Here’s to a fine 2014!
Give us a call for more information
1-877-221-3276