Computer hedging helps put more
db rffe db
nPnPv
9
NEWARK, Del. Today’s gram
tanner taces the toughest cost
prize squeeze in the history ot
modern agriculture.
“If the modern commercial
farm is to survive the economic
environment of the 1980 s,
marketing decisions must become
increasingly efficient and
profitable,” says University of
Delaware Extension crops
marketing specialist Carl German.
To help Delaware grain
producers market their crops
more effectively, German has put
together a production hedging
model which can be run on a
computer. The service is available
now, practically free.
' The model works for either
owned or rented land of any value
on any size farm. It starts from
scratch in that it first computes
Apr cost of production. Ail you
Wed to know is how much you
spent (or will spend) on each input
item per acre. Everything is en
tered as acquisition value actual
or anticipated cost.
Once this data is entered, the
model computes a target price for
your crop, based on anticipated
yield, desired profit and desired
and return to management.
"Suggested profit margins and
per bushel return to management
are given,” says German, "but
users are free to enter their own
goals as part of the process of
arriving at a target price.”
The program can be run at
several different futures prices
and anticipated yield levels. It is
designed for com, soybeans, and
wheat, and will handle potatoes as
well.
Having established your target
mice, the model next helps
the localized futures
price for your crop in any given
futures contract month. The output
from the model then gives you the
FARMER BOY AG INC.
BEACON STEEL
PRODUCTS
iw. v*.--
; _ «V
- ®S
. . * ll
» | |4
A ?- tT''"' 1 -)
w> <k*M ,
Adult Turkey Feeder Featuring
Equipment
For:
Broiler Pan Feeding System
Swine and Poultry Systems
Mrmer boy JSx INC.
Best in Design, Price and Experience
457 E. MAIN AVE., MYERSTOWN, PA 17067
V 2 Mile East of Myerstown
Call 717-866-7665 For An Appointment or Stop By Our Office. Our Trained
Staff Will Do Their Best To Assist You With Layout And Design.
anticipated benefit from hedging
at that time.
This information is contained in
a column on the printout listed as
'“Decision.” A return of zero or
greater indicates that hedging on
the commodity futures market is
profitable. A negative number
indicates that hedging should not
be done at that particular tune.
The program gives the an
ticipated benefit from hedging at
various farm sizes, land values
and crop yield the three factors
having the greatest effect on crop
profitability. And it is set up in
such a way that a farmer can
compare the profitability of his
own operation and pricing options
with those of a typical farm
operation of a similar size.
Incidentally, right now the
model for the most part indicates
negative returns from hedging
, either current, crop corn or
soybeans at various farm sizes,
land values and yields.
"Just getting returns to equal
■production costs, excluding
returns to management and
profits, is difficult at this tune,”
says German.
All the calculations involved in
running the program could be done
by hand, but using the computer is
a lot faster. And because the
machine does all the math so
quickly, more variables can be
looked at.
Though production hedging
gram opportunities for this year
have nearly gone by, growers can
use the model now to look at an
ticipated benefits from hedging
stored gram and from production
hedging their 1982 crops.
"That’s getting way ahead,” he
says. "But that’s what you’ve got
to do these days in order to realize
the greatest return on the gram
crops we grow in Delaware.’.’
German plans to demonstrate
DISTRIBUTORS FOR:
“45 Years
of
Manufacturing
For The
Poultry
Farmer”
TURKEYS
AND
BROILERS
★ DICKISON
LAYING CAGES
_ % ★ DICKISON BROOD
KMO (HCKISON INDUSTKIC«\ _
\GROW CAGES
|jj{j
19 years of Manufacturing Experience
of Poultry Equipment and will Custom
Make to your Specifications
in Del. farmers 9 pockets
this new computer model to far
mers at ci hedging seminar
December 1 and' 2. But the
program is available for use right
now.
To use it, all you have to do is call
up and make an appointment to
meet with German. During that
meeting you will provide him with
the information needed to tailor
the program to your own farm
operation. He will enter this data
and run the program while you
wait. It only takes a few minutes.
And you will then have a chance to
discuss the resulting print out with
him. The only cost involved is a fee
to cover tune on the computer.
This should amount to less than $l.
in time, Delaware growers
■should be able. to access the
COLUMBIA, Mo. Once again,
farmers are reminded to beware of
the lethal effects of silo gas.
Silo gas (nitrogen dioxide) forms
as green plants ferment and is
especially dangerous shortly after
the plants are ensiled, said David
Baker, Umversity of Missouri-
Columbia farm safety specialist.
The oxygen used in fermentation
and the nitrates in the plant are
released as nitric oxide. This gas
quickly escapes from the silage
and combines with oxygen in the
air to form toxic nitrogen dioxide.
The lethal gas is yellowish brown
and smells like some laundry
bleaches. Baker said.
Depending on its concentration,
presence of the gas can be
recognized by a burning sensation
in the nose, throat and chest.
‘‘Exposure to heavy con
centrations . can lead' to - death
within seconds,” Baker said.
“Lighter concentrations or
exposure for shorter periods may
Pullet
Grow
Cage
System
Flat
Chain
Feeding
System
computer and run their own
hedging analyses via terminals in
Extension offices around the state.
The program may also be made
available to farmers who have a
home mini-computer system.
“1 think this model should im
prove the competitiveness of our
farmers,” says the economist. “It
will make a • big difference to
someone who wants to do a good
job marketing.”
He feels growers need to start
planning their market strategies a
year ahead of time. Sometimes
that means being priced in a
hedged position far in advance of
production. This program will
make this easier to do so. He thinks
using it will help growers develop
better marketing habits and hold
Silo
gas is no laugh
:auke extensive lung damage. Or
you could die from pneumonia
vithm hours after exposure.”
Baker says silage gas forms
shortly after filling and may
persist for two to three weeks.
"Best bet is to stay clear of the
silo for the full three weeks,”
dakersaid.
"Even after this period, it’s a
good idea to run the forage blower
or 15 to 20 minutes before entering
,he structure. While the blower is
•unning, keep the door open closest
,o the top of the silage.”
Ventilate silo feed rooms with
>pen windows and fans during the
Jiree-week danger period.
"Keep the door tightly closed
setween the silo feed room and
livestock ”
Lancaster Farming, Saturday, September 26,1981—B 3
more realistic pricing ex
pectations.
“It should be emphasized,” he
says, “that as much as this
program will help farmers work
toward higher average returns on
the crops they grow, its most
important benefit should be that
they understand and use hedging
in the futures market as a tool to
reduce price risk reduction of
price risk being the primary ob
jective of any hedging program.”
For further information about
the new computer hedging
program and how to use it, call or
write: Carl German, Extension
Crops Marketing Specialist,
Agncultural Hall, University of
Delaware, Newark, DE 19711
302/738-2511.
Baker said that silo areas should
oe off limits to children and
visitors during the danger period.
“'lf you experience the slightest
throat irritation or coughing
around a silo,” said Baiter, “get
into the fresh air at once.
“See your doctor immediately if
you suspect that you have been
exposed to silo gas.
“If someone has to enter a silo
during the three-week peak danger
period, they should wear.a self
eoritaining breathing apparatus.
“The silo should be ventilated for
at least 20 minutes before entry.
Also, a life line should be attached
to someone outside of the silo to
pull the victim out if they are
overcome while in the silo.”