This past week the PDQ (price and data quotes) website was launched for farmers across Western Canada. As noted by Tom Steve of the Alberta Wheat Commission, “This level of cooperation is encouraging and we look forward to improving the level of price transparency available for farmers and other industry stakeholders via PDQ.”
In truth, this is just the beginning for grain transparency in Western Canada. When you have access to accurate, regionalized, timely, relevant data from the buyers, you are increasing your chance of making better marketing decisions.
Why shouldn’t grain prices be transparent and available to the masses just like airline prices or hotel rooms? Could you imagine if you had to phone a travel agent, airline, or hotel every time you wanted to check on prices?
Another industry that had some of the same walls that still exist today in the grain trade is the stock market. At one time not too long ago, to trade a stock you had to call a broker, who called another person, who called another person, who likely then called the floor trader. And yes, you guessed it, all of those people took a cut of the action on the way through. What happens today in the world of innovation and transparency? You can trade stocks on your own account from your smartphone for $9.99. As you can see from the TD Ameritrade pricing page, if you call a broker today for assistance or expertise you pay $44.99.
Historically, cash prices have been guarded by the grain companies based on the “it’s not that simple” principle. For the last 100 years the premise has been that every farmer gets a bid that is customized to their specific situation. The fallout from this has been lack of price transparency. When prices are transparent it leads to a more efficient marketplace and better decision-making.
Now PDQ is not the only web-based application that is breaking the firm walls set forth by the grain companies. Brennan Turner, founder of FarmLead.com (also a contributor on RealAgriculture), will tell you his site is also all about transparency by connecting buyers and sellers directly in his online marketplace.
Web-based products like PDQ or Farmlead are not the death of the traditional grain broker or grain company, but they will provide a new heightened level of innovation required to compete in the marketplace. If you require more help in your marketing with deeper knowledge or expertise, then the grain buyer or broker option is still there. Markets are complex and just having a price doesn’t mean a farmer will make a good decision. There are many analysts like LeftField Commodities and FarmLink Marketing Solutions that appear on this website regularly and provide deep analysis and forecasting based on technicals and fundamentals. This added price transparency does not diminish their value to farmers at all in my opinion.
In the end, the farmer wins in a transparent information environment. One does have to wonder why it has taken so long?
- Grain Price Transparency Project Now Posting Daily Regional Bids for Western Canada
- Wheat Market Transparency — How can it be fixed? Or does it need fixing?