Ask FarmLink: Why Don’t More Farmers Use Futures Brokers?

Whenever someone mentions risk management in grain marketing, someone also mentions futures, options, puts, calls and, eventually, most people’s eyes glaze over. Anyone who has done a marketing course has also run through a hedging example or five in their education only to find that these tidy examples involving one crop rarely mirror real life. Enter a futures broker — someone who does this several times a day —  and all your problems are solved, right? Well, maybe not.

In this latest Ask FarmLink episode, FarmLink Marketing Solutions co-founder Brenda Tjaden Lepp discusses what she views as a few of the barriers to farmers hiring futures brokers, while also explaining what it is they do and why they may act the way they do. A past bad experience may have more to do with the circumstances than the actual role of a futures broker itself, which Tjaden Lepp also explains here. A better understanding of hedging and a comfort level with the process is key to a functioning relationship with a futures broker.

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RealAgriculture News Team

A team effort of RealAgriculture's videographers and editorial staff to make sure that you have the latest in what is happening in agriculture.

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One Comment

Gary

I find it peculiar that western Canadian farmers were not involved in hedging in the futures market… perhaps the impact of the CWB marketing our grain for us for decades contributed to us being complacent about learning?

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