Growing past the straw-hatted stereotype
To some, it’s offensive.
To others, a source of dark humour.
But at the very least, FS Partners Great Lakes Division Delhi Hub grain originator Devin Homick says any lingering stereotypical images of the simple farmer are highly inaccurate.
“A lot of people still see the farmer with a piece of straw out his mouth and a straw hat.”
By contrast, the farmers Homick sees are focused businessmen — and women — exploring every natural and technological opportunity to remain competitive in a dynamically-evolving marketplace.
“They are constantly crunching the numbers.”
FS Partners’ Great Lakes Division comprises around 24 elevator facilities, says Homick, including the three-facility Delhi Hub with a 2.2-million bushel head office just southwest of that community, another 1.3 bushels of capacity near Straffordville and an additional 450,000 at Aylmer. Homick (more the road warrior) and Lyn Smithson (senior office administrator) are “grain originators” charged with sourcing product from area producers.
“We kind of act as the middle between the farmer and the end user.
“It’s a pretty exciting role, really,” continued Homick, who began “shovelling bins” with the company’s Straffordville operation in 2007, moving into his current position in 2008. He enjoys talking to farmers daily, and ultimately trying to make them more profitable.
“If our customers aren’t successful, we’re not successful.”
The three-facility Delhi Hub sources grains from an area westward to St. Thomas, running east toward Niagara south of the Highway 401 corridor, including Norfolk County, a truly unique zone based on agricultural diversity. Apart from what Homick terms “high value” vegetable crops — “You look at the watermelon acres, there’s a lot of different stuff in Norfolk,” — rises or drops in ginseng and tobacco, for example, have a significant impact on grains production. Corn and soybeans peaked in 2011/2012 in Norfolk, said Homick, before being affected by a return of tobacco, accelerated in 2017, and a boom in ginseng and attendant demand for straw, which fostered a directly-related expansion in rye, historically a cover crop valued for nitrogen retention and erosion prevention.
“Rye (acreage) was through the roof,” said Homick.
Local prices paid to farmers are based on values established by the Chicago Board of Trade, historically the rail and Great Lakes freighter hub for northern North American wheat production, plus or minus a basis, which takes into account factors such as currency, logistics (freight costs for example) and local supply and demand.
The Chicago price is global in nature, reflecting everything from harvest projections to weather to the price of crude oil and currency fluctuations.
“All of that stuff plays in,” said Homick, who checks prices before going to bed at night, again first thing in the morning, and whose desk contains a computer screen detailing up-to-the-second changes. “That’s the exciting part.”
Given the reality that, for example, there are more acres of corn in Illinois than Ontario, Canadian producers are price takers rather than price makers. And the prices local producers “take” can fluctuate wildly.
For example, the price of wheat was flat for most of 2017, before reports of a drought in parts of Western Canada and the Dakotas initiated a reactionary spike to $6.40 a bushel right around Canada Day before a gradual slide to just south of $5 as of Tuesday, Aug. 15.
“That’s just how quick it can change,” said Homick.
Farmers can lock in on a price prior to harvest, “contracting” to provide a set amount at harvest. They will often do so for at least a portion of their crop, attempting to hit a high price point through a combination of timing, market trends — and luck.
Generally speaking, said Homick, sharp spikes flatten out as calm returns, but hitting and missing the peaks and valleys is a crucial component of success. Devin’s father Walt used to come in from the field and check prices on the noon-hour news, today most farmers have up-to-the-second ‘numbers’ on their phones or tablets.
Those “numbers” can represent the difference between profit and loss, pressure exacerbated by rising land, input and machinery costs, which contribute to a trend toward larger and larger operations.
“To keep agriculture alive, that’s how it’s going to have to be.”
When Homick began with FS Partners, he estimates 60 per cent of grain came to the elevators in gravity wagons towed by tractors. Today, perhaps five per cent does, with the majority trucked. Self-driven equipment navigating by GPS is closer than one might think, he continued, noting his dad operated Massey Ferguson 285 and Case 2390 tractors, comparative “dinky toys” by today’s standards.
“And that’s not that long ago.”
As operations expand all the way around, so too does the need to hit price peaks rather than valleys. The 2017 swing from high to low on soybeans of $1.65 represents a difference of around $2,600 on a full transport truckload.
“A guy with 3,000 acres has a lot of truckloads,” Homick pointed out, noting every time a farmer locks in on a price per bushel, even a few cents difference can represent ‘big numbers’ adding big pressure to get it right.
“Because at the end of the day, you want to be farming next year.”
This article is courtesy of Jeff Tribe