BY SHEILA MIIXER MIDDLETOWN - The Penn sylvania Farmers’ Association’s "marketing association, PACMA, has officially entered the future futures trading, that is. According to PACMA’s director Marlin Miller, the association’s new marketing service for fanners “guarantees prices, market and payment through forward con tracting” and protects them from unpredictable fluctuations in the cash market. He noted PFA policy, established at last year's annual meeting, called for further development in contract marketing. The first contract was signed Monday, less than a year later. Howard Goss, director of Market Development for PACMA, is in charge, of the new futures con tracting service. Originally from a Snyder County dairy farm and a former Beachley-Hardy Seed Company salesman, Goss has been FIELD DAY DEMONSTRATION Rt. 283 You will see Gehl Forage Harvesters perform in the field beside competitive brands of pr=TTT“ 133 Rothsville Station Rd., Lititz, PA 17543 S'. Hours: Daily 7 A M, to 5 P.M.; Sat. 7 A.M. to 11:30 A.M. PFA signs first futures contract employed by PFA for the past three months. He received his degree in agriculture economics from Penn State m 1957. , In explaining the new marketing program, Goss said, “We’re a complete marketing agency we market bogs as well as guarantee price. “In practice, a producer can sell his hogs in July and be guaranteed a price for hogs he’ll only deliver m December 1982. PFA quotes the farmer a price now, and that’s what he gets as long as his hogs meet the grade requirements at delivery.” The PFA futures differ from commercial contracts farmers may be familiar with, from firms like Merrili-Lynch or Dean Witter Reynolds. First, the PFA contracts call for living, breathing animals or truckloads of' gram to be delivered the day the contract matures, and there’s no buy-back provision to escape the delivery obligation. , Featuring 6ehl Forage Harvesters WEDNESDAY, JULY Rt 722 Undis' Farm Come And Join Us Far A Daf similar size. BINKLEY & HURST BROS., INC. 10 A.M. to 3 P.M. At The John L. Landis Form Lancaster, Lea brook Rd. Howard Goss 14 * 1982 Directions: The Landis Farm is located along Rt. 283. Get off at the East Petersburg exit, take Rt. 722 approx. V* mile to Colebrook Rd. - Turn right. Farm is on left side. *Call For Rain Date If Bad Weather REGISTER FOR DOOR PRIZES Before Lunch - Drawing at 3 P.M. Musf be present to claim prize. Another difference is that PFA only asks for $9O in "up-front” money rather than $5,000, the minimum required by most commercial firms. Goss stressed, however, that PFA doesn’t shortchange the farmers when it comes to representing their interests in the market. He said the farm association deals directly with a broker who has seats on both the Chicago Board of Trade and the Mercantile Exchange. To take advantage of this PFA program, of course, the farmer must first be a member of the state association which costs $5O or $55 depending on county. Then the farmer must purchase a minimum one share of PACMA stock for $25 a share. According to Goss, the farmer can then enter into a forward contract on commodities like hogs, steers, corn, wheat, soybeans and soybean oil meal. What does PFA get for the time Lancaster Farming, Saturday, July 3,1982—A27 it spends monitoring the marketplace and studying trends? According to Goss, the only thing PFA and PACMA hope to do is break even. Any profits realized in this venture into the futures, he said, will be returned to the share holders. To cover their operating costs, such as brokerage fees, cost of trucking livestock and gram, shrinkage on animals, margin calls, and auction barn sales commission, the prices paid to farmers contracting through PFA will be less than what they would receive if dealing with a com mercial broker. Miller pointed out PACMA has been selling farmers’ cattle and hogs for the past seven years. However, with the incorporation of forward contracting, he said PACMA is anticipating more volume. The commodities sold by the farmers, explained Goss, will have to be delivered to predetermined points across the state. The livestock and grain will then be marketed through existing channels. Any additional hauling that is required after the farmer delivers his goods will be done at PFA’s expense, he said. "The farmer specifies the marketing month when the con tract is signed,” said Goss, "but PACMA decides which day of that month to take delivery in order to get the best price.” How many hogs should a farmer have to sell m order to take ad vantage of PFA futures’? Goss stated there are two types of hog contracts a "mini” and a "full.” The mini-contract requires 15.000 pounds or about 70 hogs grading 1 and 2. Goss said a few 3s will be tolerated, but they will be discounted in price. The "preferred” full contract, he added, calls for 30,000 pounds. If a farmer can’t come up with 15.000 pounds, Goss mentioned the possibility of PACMA "pairing up three or four farmers” to fill out the contract, thereby handling smaller amounts to meet the needs of its members. The cattle contracts, however, have no mim categories. A full contract of 40,000 pounds or about 40 animals is the only option. Any contracts that are delivered underfilled or overfilled will be settled according to the day’s market price, said Goss. Both Goss and Miller cautioned farmers about entering into a futures contract without first knowing their operating costs. "A fanner is speculating if he doesn’t know his costs," said Miller. "We don't want any. parts ot speculation.” Goss added that farmers who have determined their production costs should not contract more FOR A CLEAN SWEEP SEE THE MODEL 501 GRASS MOWER ALLEN H. MATZ, INC. 505 E. Main St, New Holland Ph; 717-354-2214 SERVING THE COMMUNITY ( THIRTY-ONE YEARS ' LANC. CO S OLDEST FORD DEALER (Turn to Page A2B)
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