Learning to use commodity marketing
UI Extension creates new curriculum to educate producers on commodity marketing
Commodity markets have experienced extreme volatility and drastic shifts over the past five years. As a result, Idaho farmers are struggling to secure competitive prices for their crops and meet their costs of production.
In an effort to overcome this crisis and educate farmers on how to protect themselves in this marketplace, a new commodity marketing curriculum was created collaboratively by University of Idaho Extension, the Idaho Barley Commission and the U of I College of Agricultural and Life Sciences’ Agricultural Commodity Risk Management Program.
“Working with Kelly Olson and Idaho producers, I saw firsthand the need for a new marketing education,” said Norm Ruhoff, director of the Agricultural Commodity Risk Management Program. “We needed to provide an alternative for producers to drive a profit in these challenging times.”
Developing the Curriculum
The new curriculum was developed by Ruhoff, CALS graduate student Brett Wilder and UI Extension specialist Hernan Tejada. As an undergraduate at U of I, Wilder was exposed to commodity merchandising and futures markets by participating in several funded portfolios in CALS and the College of Business and Economics. He also participated in the Agricultural Commodity Risk Management Program, where students trade commodity future contracts with real money and manage real cash grain positions.
These experiences gave Wilder the skills needed to take the lead on designing the commodity marketing curriculum.
“The basis of the project started on the idea that producers, especially those growing cereal grains, had a steep learning curve with risk management and locking adequate profit margins for their crops,” Wilder said. “Commodity risk management is a very complex topic that can be very difficult to understand in a practical setting unless it is started from the ground up. Therefore, we designed it so each section added an additional component on top of those already discussed.”
To cater to all audiences and knowledge levels, the curriculum was designed in three different sections. Each section provided participants with the background knowledge necessary to understand the complex nature of commodity merchandising.
“Producers will gain a better understanding of futures markets and gain the ability to lock in their cost of production, increase their profit margins, and ultimately receive more consistent profits for years to come,” Wilder said.
The creation of the curriculum was funded through a grant awarded to the Idaho Barley Commission from the Western Center for Risk Management.
“We wanted to find a way to productively use these funds,” said Kelly Olson, the executive director of the Idaho Barley Commission. “Norm Ruhoff and Ben Eborn helped identify this need and the Department of Agricultural Economics and Rural Sociology identified a capable graduate student, Brett Wilder. The project was very well conceived and met the need to train farmers and ranchers across the state on commodity marketing.”
Bridging the Gap
In September 2017, UI Extension and the Idaho Barley Commission hosted a training session in Hailey, Idaho, where Wilder taught 14 members of the UI Extension farm business management team the curriculum. The curriculum will be available for producers on the Idaho AgBiz website in June 2018.
The Western Center for Risk Management also recognizes the importance and value in this curriculum.
“They believe this curriculum to be an outstanding project and product,” Olson said. “They hope to use this as a training module in other states in the future.”
“This will be the first step toward a computer-based risk management program,” Ruhoff said. “Our goal is to engage producers on the front line.”
Article by Liz Bumstead, College of Agricultural and Life Sciences
Published in June 2018