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Corn and soybean harvest is here, a hectic two-month stretch for both farmers and merchants. This season has us reflecting on how merchandising work has changed over the past few years and how we hope it stays the same going forward. In this editorial series, we look at how technology has made the process of originating, procuring, and hedging grain more efficient – and what we plan to do with all of the time we’ve gotten back.
Think about those big purchase days in the grain business. A big report day. Futures are rallying. You’re on the phone with one producer while three call-waiting lines are blinking off. From a margin perspective, this is a day where the merchandiser has the biggest opportunity to make money – and the farmer does, too. The cash markets are up, basis is a little wider; you know everybody in the world is making hay. Can you answer the phone fast enough? Can you get more money out of Chicago, bringing it closer to where you work, the community you live in?
This is certainly what I’m in business for. Sixteen years buying grain all over Northern Illinois, I have learned how impactful those big purchasing days are for the economics of a rural community. When the local elevator is making more, the local farmer gets better service, faster pits, a higher-grade facility. When the local buyer’s always up and running, farmers always have a place to deliver, cash to make, and nearby relationships to build. I saw this growing up on a corn and bean farm near Dwight, Illinois – saw it in the finances of our operation and the decisions of neighboring ones.
You’d think, then, when those big purchase days were done, I’d go home happy, or at least fulfilled. But I always left disappointed. Frustrated. Thinking about the calls I didn’t get to. The call-waiting lines blinking red. There was a limit to the business one merchandiser, one origination team, one purchasing facility could do. Why were we hitting that limit so quickly?
The technology wasn’t cutting it. Entry and data recording was mostly a manual process. Different steps for the transaction were completed in different software platforms, so I was never organizing and hedging contracts in the same place. Plus, racing call to call, you have less time to double check those hedges and contracts. You open yourself up to mistakes. And I spent half my time finding trucks, or replacing a truck, or making sure the producer was there for the truck. I wondered if my business was more logistics and administrative than merchandising.
On those big purchasing days, I sometimes entered contracts from five o’clock in the afternoon to nine at night, after business was closed and the calls stopped coming in. I’ll never forget the day I asked my boss to call my wife and tell her I wasn’t going to make it home for dinner that night. It wasn’t value-added work, not for me. It was a slog to capture the value we already created. Shouldn’t technology help us keep up with the busiest days of the year? Shouldn’t it make the simple stuff simpler than this? If I can do my banking, buy furniture, even shop for groceries online, shouldn’t my business benefit from similar efficiencies?
More importantly, think of the work technology will never replace. The work you could do more of if technology handled the rest. Like getting to know a producer. Getting to know their production, priorities, storage, and acceptable levels of risk. How they farm, and who they farm for. You’d have the time to answer the important questions, like, Is this the best price you’ve got for me? And you wouldn’t have to worry about walking through questions with obvious answers, like, Why can’t you match this bid down the road? All of the information would be consolidated. Right at the fingertips of both merchant and farmer. The irony is the new iteration of technology can bring us closer together, to build more lasting relationships, than we could have with the last iteration of technology.
Now, think of all those other working days. They may not be as chaotic. You may not be burning midnight oil to get contracts in. But you’re still losing: losing those phone calls, losing minutes to limited software. Those big purchasing days, they may be when you wish for more time most of all. The regular days, though, when you are paying attention to the inefficiencies least of all, are when the time really adds up.