Grain Farmers Learn Options Of Better Business Together

Ag Commoditymarketing Club Helps With Stock Market

May 29, 1991|By Kerry O'Rourke | Kerry O'Rourke,Staff writer

County grain farmers have banded together to learn more about marketing their products in order to get the best prices.

"Grain marketing should be part of your everyday work schedule," said Melvin Baile Jr. of Melrose. "But farmers tend not to pay attention at the most volatile market times -- planting and harvest."

About 20 farmers have joined the Carroll County Ag Commodity Marketing Club to learn more about buying and trading options on the stock market. Most have contributed $100 each, which will be used to buy options traded at the Chicago Board of Trade.

The group's bylaws call for the club to retain at least $500 in a money market account.

"Most full-time farmers selling any volume of grain are familiar with options, but maybe just enough to be afraid of them," said Baile, who farms about 600 acres withhis father.

Baile is president of the club, which was organized in March.

Jim R. Russell, a marketing specialist in the Agriculture and Resource Economics Department at the University of Maryland at College Park, has been advising farmers on marketing alternatives.

"The goal is for the farmer to become more proficient at marketing," he said. "This is farmers getting together informally to teach each other and help each other."

The group meets from 7 to 8 a.m. every other Friday at the Carroll County Cooperative Extension Service office.

Farmers have become proficient atproducing grain, but many need assistance marketing it because of new alternatives available, Russell said. They should be familiar with the options and futures markets and with buying "forward" contracts, he said.

Janice L. Barnes of Westminster, who farms about 900 acres with her husband, G. Nelson Jr., said, "Marketing is as important as producing."

The Barnes are sharing the job of club secretary.

Frizzelburg farmer Edmund Dutterer, club treasurer, said he hopes tolearn new marketing techniques so he can "hit more of the highs" in the market.

Baile said farmers still can get a good price by selling to a broker in the county or in Lancaster, Pa., for example, but they need to be aware of alternatives.

The club has contracted witha Washington broker, but has not yet voted on what options to buy, Baile said. Because everyone in the group grows corn, they've decided to trade in corn options, he said.

"Options are a tool to limit risk," he said.

Members won't really be buying or selling grain withthe options they buy, Russell

said. They'll be watching the market and learning to make decisions based on actual trades, he said.

"It's hard to learn these things on your own," Silver Run farmer Lawrence E. Meeks, club vice president, said.

The club may travel to Chicago to see traders in action on the Board of Trade floor. Some county farmers already have seen the "pandemonium," he said.

Farmers in 18 Maryland counties are involved in 14 marketing clubs, Russell said.

Not a single club lost money on its first trade, but all loston the second, he said.

Baltimore County farmers formed a club last summer, said G. Richard Curran, county extension director there. The club is "in the red" now, he said.

Baile said grain prices havebeen down in the last several years because exports are off. Farmerswill need to be good markets to survive and compete with foreign producers, he said.

"We've really been squeezed," Baile said.

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