Online tool keeps farmers in game
The Iowa Commodity Challenge was launched in mid-November. It is an online market simulation game, giving players an opportunity to learn firsthand how to improve their crop marketing skills. The game includes the use of futures and ag options as marketing tools (see cover story). It can help you improve strategies to sell cash corn and soybeans.
Iowa State University Exten-sion and Iowa Farm Bureau are making this unique educational program available. Four grain marketing clubs in central Iowa hosted the initial meetings in November. Those marketing clubs (at Nevada, Lynnville, Conrad and Ogden) will follow up with meetings in February and March.
The count shows 108 people signed up at the four initial meetings, and those farmers have already started playing the game. Another 50 or so people are initially participating via the Farm Bureau sign-up, and more are expected.
• Game helps farmers learn how to improve grain marketing.
• It reflects real-world markets to explore how various tools work.
• ISU Extension hopes to expand number of farmers participating.
The grain marketing clubs are face-to-face meetings, with ISU Extension specialists and a Farm Bureau commodity specialist on hand to teach, answer questions and provide assistance. The other way you can participate in the game, through Farm Bureau, is strictly online, but with webcasts and a workbook to help.
The Commodity Challenge has been around for several years via the Internet. It is based on a University of Minnesota website. Last year ISU Extension grain economist Chad Hart and ISU Extension farm management specialist Steve Johnson, along with Ed Kordick of the Iowa Farm Bureau, developed an Iowa version of the game using local prices along with an Iowa grain marketing workbook.
They held a pilot program with farmers at Ankeny, where they had five meetings. This year they’ve expanded the program to the four central Iowa marketing clubs, which ISU Extension helps coordinate.
Still time to sign up
The program is also available statewide through Farm Bureau. Enrollment through the four grain marketing clubs has ended, but anyone in Iowa who is a Farm Bureau member can still sign up and participate online by contacting Kordick at 515-225-5433 or email@example.com. You need a password to gain access to play the game via the Internet.
ISU’s Hart played a key role in putting together the 40-page workbook used in the program. The main difference between the Iowa version of the Commodity Challenge and the online version that is being used by other states is Iowa has developed a curriculum — complete with web-casts, the workbook and weekly activities in the workbook for participating farmers.
“It’s a mini-course, and we help you through it, and provide more information and instruction rather than you just going online and doing it alone,” says Hart.
Sharpen marketing skills
It’s the same basic idea Hart uses in the classroom. He uses the workbook in the ag marketing course (Econ 337) he teaches students at ISU at Ames. “We’ve combined the website game with what we’ve been doing in the classroom the past few years, and we created the workbook,” he says.
“We walk you through and make the information practical. What’s it mean to put on a futures hedge? What’s it mean to buy a put option? What can the various marketing tools do for you? The Iowa Commodity Challenge allows you to actually make these grain marketing transactions like you would in real life. Although it’s just a game, it lets you experiment with these marketing tools, using real prices.”
At the beginning of the game, participants start out with 50,000 bushels of corn and 20,000 bushels of soybeans (all fictitious), and they have to get that grain marketed by Feb. 29. That’s when the game ends.
“You don’t have real money on the table, so you can afford to try different strategies and really learn how to use these tools,” says Hart. “We hope to expand this educational program to reach many more farmers statewide over the next several years.”
Several high school vo-ag teachers and classes at community colleges have expressed interest in participating. Local co-ops may get involved and offer the program to interested farmers as a customer service. Other marketing clubs could do this, too.
“Especially with the increased volatility in crop prices farmers are faced with in this era of increased demand and unpredictability in the global marketplace, and with rising crop production costs and tightening profit margins, learning how to use these grain marketing tools to your benefit is very valuable,” notes Hart. “The Iowa Commodity Challenge is a great way to learn more about grain marketing and how to put these tools to work for you.”
Johnson sums it up this way: “If you did a better job of managing your marketing risk and could capture an extra 10 or 20 or 50 cents per bushel per year, think what a difference that would make.”
This article published in the December, 2011 edition of WALLACES FARMER.