Featured In This Episode

Channel Seedsman Andrew Phillips

Guest | Channel Seedsman

Andrew Phillips

Mark Schleisman

Guest | Channel Farmer

Mark Schleisman

Amity Shedd

Host

Amity Shedd

Amity Shedd
Hi, everybody. Welcome back to Channel Chat, Season 2. I'm your host Amity Shedd, and today for this episode, we are in Lake View, Iowa, with Channel Seedsman Andrew Phillips and grower Mark Schleisman.

Welcome to the episode, guys. How's it going?

Andrew Phillips
Good.

Mark Schleisman
Good.

Amity Shedd
Good. Let's start with some introductions. Mark, would you like to kick it off?

Mark Schleisman
Sure. I'm Mark Schleisman from Lake City, just about 15 miles east of here. I farm with my family. We call ourselves a diversified family farm because I farm with my son, son-in-law, my daughter does the records, my dad's still around and helps quite a bit and so do my uncles. So, I'm a little unique as a farmer because I was in industry business for about 27 years, and then I came home to farm about 10 years ago.

Andrew Phillips
My name is Andrew Phillips. I started in the seed industry about five years ago and got the opportunity to come back to my home area in Lake View and start a business. It's going really, really well, and I get to work with a lot of people that I grew up with in this area. We also farm on the side with my dad and my brother. So we farm corn and soybeans, and we also have a vineyard. So, that's kind of a unique twist, but primarily, my job is to run Phillips Ag and my seed business. And we also do some fertilizer and chemical and crop insurance.

I've been with Channel in this area for three years now, and it's been a really, really fun and a good way to give back to the community, and kind of get involved with the people that I've grown up with my whole life.

Amity Shedd
And Mark, for you, how long have you been in this area?

Mark Schleisman
I grew up in Lake City and then moved away. I was a crop consultant in central Nebraska for about nine years. And then I managed the popcorn division of Conagra Foods, Orville Redenbacher and ACT II for about 24 years, and then worked as a consultant for four more years with them.

Amity Shedd
Wow.

Mark Schleisman
And then in the last 10 years, I've been home farming. My dad and uncles used to farm together, and we took over their operation. And that's when I brought my kids in. We have hogs — we sell about 30,000 pigs a year. We have a cow-calf herd, about 360 cows and about 4,200 acres of row crop, which our primary crop is popcorn, and we grow some corn and soybeans. And a little bit of triticale or rye that we'll use as our own cover crop seeds.

Amity Shedd
So you guys both grew up with kind of agriculture in your family. What was that like?

Mark Schleisman
Every day? I mean, that's what agriculture was like for me. You got to feed the animals seven days a week. There isn't a day off. It was kind of nice in our operation that we could get a vacation every now and then because it was a family farm, and there were two other uncles there that could take care of things while we were gone. From the time I can remember, it's been running a tractor, baling hay or cows, pigs, crops, whatever.

Andrew Phillips
For me, it was a little different. Growing up, my parents were kind of like, "Are you sure you want to be in agriculture? Maybe you should go get out and do something different, be a doctor." Be something else, right? And when I was getting closer to my senior year of high school to go leave for college, I didn't know what I wanted to do, and I kind of landed on agronomy.

When I was away at college, I realized that I missed the farm a lot. And that's kind of ingrained in you, I think, when you do work on the weekends and you help on the farm at nights and stuff. So I think a lot of that came down to I just wanted to get back here. And actually, how I met Mark was he hired me for my first job at Conagra as a popcorn agronomist. So that's how I met Mark. And then from there, I kind of just progressed through a few different jobs that have really been rounding for me and then landed here as a business owner and a seed salesman.

Amity Shedd
And Mark, what brought you back to farming? I know you mentioned your family got into it and you brought your family back. But what clicked from the business side to the more ag side?

Mark Schleisman
Being part of the popcorn business at Conagra, I traveled a lot. I was gone probably 80% of the time out of this area, whether it be to another plant here in the United States or South America or Europe. And honestly, I love to travel, I hate to be gone. And you missed a lot of the kids' activities, things like that. At the same time, I always wanted to farm. There was never just a really good opportunity when I ... well, when I graduated from college in 1986, kind of the peak of the farm crisis, there was no good opportunity to come home. So it was good for me to get away and be an agronomist, have a job, work for somebody else.

And then when my dad and uncles were getting to that point where they wanted to slow down, we wanted to start up. And it was just a good opportunity. I don't want to give up those experiences I had traveling, and I still like to do it, but it's more on my schedule now. I need to be home, need to go to the kids' activities a bit more. I missed a lot of things in all that travel. And by being home on the farm, I can set my own schedule.

Amity Shedd
Right.

Mark Schleisman
A little bit. Weather's pretty influential, yeah.

Amity Shedd
Plays a little bit of a part, yeah.

Mark Schleisman
Yeah. Yeah.

Amity Shedd
Let's go back and talk about your guys' start of your relationship. You said that Mark hired you for your first job. How does that relationship continue today?

Andrew Phillips
Yeah. I guess to expand on that, starting up in this area with Channel, I just started to go find the contacts I knew were good people who I trusted, who were loyal, who would actually just listen to me and give me a shot from the standpoint of, "Hey, come sit down, show me what you have.” And then we can kind of go from there. And Mark was one of the first people to say, "Yeah, let's try this." You know? Because Channel's a brand-new company in this area. We're kind of writing our own story, you could say, in this area. So it's been really, really good.

Mark was one of those people on the ground level who kind of got me started and helped me get started and has continued to do that over the years. And we've worked together. But what's really neat about Mark is that I call him an influencer. So he's an influencer in his community. People watch what he does. People respect the way he does things and respects his family. And so I really like working with influencers because not only do they teach me a lot, they're kind of on the front edge of where agriculture is going, and that's really fun to work with people like that.

Amity Shedd
How does that make you feel?

Mark Schleisman
It makes me feel good, but it's the same reason that... I'd never planted Channel before. I knew the name, but I'd never planted Channel® seed before. But when Andrew offered that, at the same time, I trusted him that he wouldn't be giving me something that's going to fail. I just trusted that he would give me something that was good. And when I look at a supplier or somebody I want to work with, it's a lot the same way. I don't want to just buy seed from somebody. I want to learn as the year goes on. If we're not learning, if we're not changing, we're going backward in this business it seems like. You're not going to plant the same hybrid probably much more than two years in a row because there's something new or better coming, and you want to be in contact with the people who know that.

I think Andrew knows that's kind of the way I am. I'm not going to want to plan an old standby hybrid just because it's an old standby hybrid. I want to try the next best new thing, whether it be agronomically or genetically. And I know he can be a resource to us for that.

Amity Shedd
Mark, you touched on it a little bit about what Andrew teaches you and shows you. How do you guys benefit from each other in business, and why is that relationship so important?

Andrew Phillips
I'll start with that question. I think, for me, I think there are a lot of seed dealers around, but like he said, you got to try to work with the people you trust and you think have your back at all points. So, for me, how I always do things is I try to learn as much as I can from the people I work for. I learn every year new things about everybody's operation, about their family, about the products, obviously, about new agronomic things that we've seen throughout the season. I mean, that's my job is to learn. So, I try to be a really good listener. So I learn a lot from Mark from the standpoint of every time I pull on his place, they're working with different chemicals than everybody else because they have popcorn, or they're working with different timelines because they're harvesting their triticale and then they're trying to plant beans after.

They have so many different ways to do things on their farm that it just teaches me a lot about how can we diversify? How can we be profitable? Who should we bring in to make each person's operation better from the standpoint of labor, new techniques, new technology? Mark is on the cutting edge of technology. They are diversified from the standpoint of different crops, pigs, cows. They're diversified from the standpoint that they have an entire three generations of different family members who are young who can work longer nights and the middle management people. And then the old guys are just there to kind of make sure everything's going the way they want it.

So, what I pick up from guys like Mark who I work with, I pick up a lot of things that help other operations that when they call I can say, "Hey, I understand your problem. This is what I have seen from other operations." So it kind of ... I guess I take pieces from every person I work with, and I build a story. And that story helps me be influential in the operations that I work with. So, I guess I just try to learn and I try to piece it together, and I try to make sure that when I learn from people like Mark,I can benefit other growers too and pass that information along.

Amity Shedd
Right.

Mark Schleisman
And for me, Andrew's a good source of, you know, "What are you seeing in the field?" Because he's not just somebody who sells you the seed — he goes out and looks at it. So if I see something strange in my field, I may be calling and asking, "Have you seen this elsewhere?" Or he may have already called me and said, "Hey, I'm seeing this." And then I go look and I see it. Or he's at least paying attention to what's happening in the area, not just, "Oh, I sold the seed and come back next fall, see how it yields," but looking at it throughout the season.

But then, talking about everything from insects to weeds to fertility issues, what have you, he's a resource for that. And that's what I want in somebody I deal with as a dealer again, not just selling me the seed.

Andrew Phillips
Yeah. I feel like initially when I first started Phillips Ag and my business, I thought I was a seed salesman. And it turns out you're not. You're a consultant, sometimes they're having problems within an operation, father, son. And you talk to the son, and then 10 minutes later, the father calls, and he's talking this and that. So, you're not just a seed salesman, you're a part of that operation and you have financial conversations, you have weather conversations, you have, "Where are we at with the process of turning your operation over to the next generation? What is your plan?" I mean, we have so many different conversations throughout the year. It's not a seed business. It's more of a ... to me, it's my life. Everything encompassed together allows me to be a part of every operation that I work with.

Mark Schleisman
I mean, you're not using the seed sales as the business. It's the business, and seed sales is almost secondary to the business or the conversation.
A lot of times, you don't even talk about the hybrid or hybrids that Channel has to offer. It might be just a conversation about how the crop is growing. The seed sale is almost something that's going to come later. It'll just happen because it's more the relationship than it is, "I got this product I need to push on you today."

Andrew Phillips
And those are the kind of people I want to work with. It’s that right there. He just explained it perfectly. I don't want to work with a bunch of people who would sell you out for $5 a bag or don't value you picking up the phone at 5:30 a.m. or 1:00 a.m. or in the middle of the night. I mean, I want to work with people so that my turnover rate is very low and so that you can build that relationship and you can have loyalty and you could have trust. And you know you can give him $10,000 of seed and you know he's going to pay you or bring it back and not find different avenues for it. So, it's a lot of things, especially now with the economy of agriculture, trust and loyalty becoming huge because you need to have that when things are tight financially.

Amity Shedd
Right.

Mark Schleisman
You can't make a wrong move, and you got to have people you trust giving you some advice along the way. I mean, I kind of ... I sell popcorn seed internationally also. But I would say most of the people I deal with, they don't consider me as the salesman. I'm kind of the advisor about how to row popcorn in general. And I look at Andrew the same way, and that's who I like to do business with. My focus isn't selling them seed, it's helping them grow a better crop. And that's what I think he does for us.

Amity Shedd
What do you think about whenever Andrew calls you an influencer? Do you think you're an influencer?

Mark Schleisman
I like not to be, but people watch-

Amity Shedd
He's not answering.

Mark Schleisman
... and we're kind of in a visible spot where we live right along a highway. Everybody drives by and, "What are they doing now?" They look and ...

Andrew Phillips
Yup.

Mark Schleisman
I like the progressive side of being an influencer. I mean, whether it be cover crops or conservation. And I think the business, being from the business side for 20-plus, 30 years, you see that because you got to have continuous improvement there all the time in business to survive. And I think that's what we need in agriculture. We can't just keep doing it the same way all the time.

I credit my dad and uncle somewhat for that. They were pretty progressive themselves. In the later years of their farming, they kind of started gliding like most guys do. And if you got five or 10 years left, you're not going to go out on a limb very far and try something new. But I like trying something new, and that's what we do. We change every year, and my son and son-in-law buy off on that, and my dad and uncles have bought off on that a little bit more as we go all the time because they realize we can't be the same all the time. Technology changes, the finances have changed tremendously just in the 10 years I've started. I bought my dad and uncle's machinery for $2 million, the whole operation. I can tie that up in four pieces now. In 10 years, it's changed that much. Unfortunately, a million dollars isn't very much in a big farm operation anymore.

Andrew Phillips
Right.

Mark Schleisman
And when you're working with that kind of money, you got to have advisors around you trust and be progressive.

Amity Shedd
Speaking of trying new things, let's talk a little about your national conservation legacy award from the American Soybean Association. Can you explain a little bit about why you were awarded that?

Mark Schleisman
It all started with my early on relationship with the Iowa Soybean Association. They actually nominated me for the award. Close by here is a watershed called Elk Run, and it flows into the Raccoon River, which has received a lot of press with the water quality in Des Moines. So Elk Run was a demonstration project that the Iowa Soybean Association was doing, and we were one of the first to cooperate with them in that area and put in a bioreactor and a saturated buffer. And we have meetings at the farm, they bring busloads of people from Des Moines whoaren't farmers or ag-related but to kind of show what we're doing.

And the Soybean Association's really helpful in educating farmers on what's happening with the water in the tile lines in the rivers and such. And the Des Moines Water Works lawsuit came on, and it was just, "Let's try some things. Let's do more things than just bioreactors, saturated buffers." We were messing around with some cover crops. I worked with Practical Farmers of Iowa on cover crops and documented the economic benefit of cover crops to grazing with cattle or cows.

We always knew it kind of had a benefit, but that was a really good exercise for me to go through because it put dollars and cents to that return, and it opened my eyes up. But it was really something I could show to other people on what cover crops had to return to a cow-calf or a cattle operation in terms of residue. And then all of a sudden, we started noticing other things. Soil quality benefits of the cover crops. And instead of just planting 80 acres of cover crops, we went to 300 acres of cover crops and then 2,000 acres of cover crops. Then last year, we did about 4,000 acres of cover crops almost on every acre. And we're not going to graze all those acres, but we're going to get those soil quality benefits. It was something we did that made it easier to step into no-till, easier to step into some strip-till because of the cover crop and showing what it does to the soil health and loosening it.

The old mentality was we got to go out there and turn it black and pull the ripper through the ground and loosen it up, and we found out the cover crops can do that for us, loosen the ground. I had some field days with farmers in the area, and all those things kind of went together. That's how we got the conservation award through the Iowa Soybean Association nominating us for some of these things we did. Again, on that whole side, I have to credit my dad and uncles because the bioreactor and saturated buffer is actually on one of their farms that I farm for them. I went to them and asked them, "Can we put this there?" And the first thing my dad said was, "Well, do we have a problem?" I said, "Yeah, we kind of do, probably. I mean, the water coming out of the tile lines is this many parts per million nitrogen, and it really should be five instead of 15." And, "Oh, OK. Well, we can try it then." And now I can take reports to them and show them the benefits of that. And they're like, "OK, yeah, we can do that some other places, too." So, they're seeing the benefits of it.

But, at the same time, they're of the generation that isn't really wanting to talk about stuff like that because they've done it for years, and they're still that way. Farmers who are in that age group are just a little bit more to themselves and don't want to say we can do better at nitrogen and crop management and all those fertilizer things that we do need to do better at. And so, I like educating or maybe trying to convince people that we can do better. And one of the things that I said was, I'm all for all of these conservation things, but I'm going to make them pay on my farm. I'm not going to do it just because it's the right thing to do, I'm going to do it because it's the right thing to do, and we're going to make money doing it. And that's been my challenge to myself and my son and son-in-law. And dad is, "We'll do this stuff, but it's going to make us money." We're not going to do it because we got to survive, too.

Andrew Phillips
See, now you're starting to understand why I like to work with people like him, right?

Amity Shedd
Right.

Andrew Phillips
So he's done the cover crops. He's showing that you can do it on a larger farm. It's not just a, "Oh, only can do cover crops because we only have so many acres." Right? So he's doing it on a lot of acres. I took what he's doing, and I am implementing that on the farms that I am farming. And then, once I am super comfortable with that, I will offer that advice out. So, this is the learning process, right? For me. So, I'm learning a lot from him. I'm implementing it on my own farms. And then once I understand it completely like he does, then I can help people understand it. I will never push anybody to do the things they don't want to do. But it's just this circle.

What we're doing right now, my dad is planting into green cover crop corn into green cover crop, and we're going to kill it. And I know exactly what he's talking about. That field is drier than the stuff we didn't cover crop. It's warmer because it's dryer, and water is harder to heat. The soil till is unbelievable. It works up so nice. You can no-till or vertical-till or strip-till right into it and have a great seed bed. There are a lot of things that I really like about that also. And I'm trying, but it gets back to why do I partner with the people I partner with? Because as I grow what I call my family of growers and I get people like Mark and other younger guys too, he is an advisor to me as sometimes I am an advisor to him, but sometimes I become an advisor to some of these younger guys coming back who, you know, they're green behind the ears. And yeah, I'm only 32, but I have been in the industry for a long time, you know, all my life. It's just really fun to work in an area like this.

Mark Schleisman
Yeah, something Andrew said there sparked a thought. To answer your question about how do I feel about him saying I'm an influencer, I don't want to be an influencer in the sense of like he said, talking somebody into doing something. I'd rather show them that, hey, this is what we've been doing, and it's worked really good for us. And if they want to do it, they can do it. I'm not going to tell them they should do it because that's why they're farmers. For the most part, they want to do what they want to do. They don't want somebody telling them how to do it, but they do watch what we do. And then some of them try it, you know? Or they'll call and ask questions, and I'll say how it works for us. They might ask, "Do you think that'll work for me?" And I'll say, "Yes," or, "Maybe you got to do it a little bit different." But I would rather show and not be a forceful influencer by telling somebody what to do.

Andrew Phillips
Absolutely. And those are the influencers who are the hardest to find.

Amity Shedd
Yeah.

Andrew Phillips
The best ones, but they're the hardest to find. So, you have your people who are very opinionated and out in the public in the community. Those are the easy influencers everybody is trying to go to. But it's the people who kind of are the quiet influencers everybody watches and everybody respects. Those are the ones who to me are the really powerful ones I learn a lot from. It's pretty neat to work with people who are so progressive.

For example, last fall, I was riding the combine with him, and we were doing seed beans, soybean, and he goes, "Check this out." And he had a camera that was in the clean grain auger, and he'd hit it and be like, "If I go this fast, see all the extra foreign material that we're kicking in? That's not good for seed beans." So back the speed off and then it got clean again. That's just one small tiny technology example of being progressive that is profitable, that makes him more money on his bonus, for example. But those are things he just shows me what he does. We talk once in a while. As we go through the growing season, I try to call him. He's a super busy guy, but I try to call him or if he calls, I usually pick the phone up because it's that you know there's going to be something coming out of it. So it's a good relationship that we have, and I really enjoy working with people like him.

Amity Shedd
It's so interesting and cool to hear all this information, to see how it's passed from you to him and you to others and you to others. And it's very neat to see.

So that kind of brings me to my next question of being a business person in agriculture. And you touched on it a little bit in the past, but where do you see the future of ag and your place in innovating and hopefully improving? Where do you see your place in that?

Mark Schleisman
You know, I think the big challenge is that public perception of us and our relationship with the public. And that's really become obvious to me when ... I mentioned the bioreactor and saturated buffer where they brought people from the city out. They don't understand what we go through, and we don't always understand what they're thinking or seeing either. And we just need to communicate more. We're going to have to become better communicators with the public, the non-farming public to continue on. We got to do better, and we got to show what we're doing better. And the public has to say what they don't like what we're doing so we know what to change, too.

Now, I don't think lawsuits are the way to do that. Like, maybe the Des Moines Water Works was, but we can have win-wins and make it work, too. And I think that's, we just got to listen and talk more.

Andrew Phillips
Yeah, I think that's probably one of the biggest things that drives larger companies too, like Bayer and Corteva and Syngenta. I mean, I think they're trying to make the biggest effort that they can to be sustainable, profitable and healthy for the public. And every year, we make tons of changes to do that for the people we feed. And we're trying extremely hard to make those changes and to survive, especially when the economy is tougher like it is today. But I think he's exactly right. I think it's very important that we get our word out, and that's not an easy thing to do because the population of farmers is so small in the United States compared to the overall population. So it's just something that I think we need to try to make sure people understand that we're here for them. We're trying to grow healthy, sustainable food for the world, and we're not going to stop. We're not going to try to keep doing things the way they were in the past. We're going to try to continue to make changes to make everything better and more efficient.

Amity Shedd
You guys are both family men, so where do you see their future in ag if there is that something that you hope to pass down to them? What are your thoughts on that?

Mark Schleisman
Of course. I mean, I want to pass it down, but I mean, they have to want to do it too. I'm kind of excited about the younger generation. Even my son who is a senior, I’m excited that when he comes back in two or three or four years, whatever college he ends up going to that he ... That age group is better at communicating than what we are with social media and things like that. And that's what we need to be better at because my age and older farmers aren't comfortable communicating with the public. But I think that next generation will be or they'll be more comfortable than I am. Now, that's what excites me more about them. They definitely have more of a worldly view. I mean, I'm kind of unique that I have a worldly view because of my previous work experience, and I think that's brought a lot to the farming operation because I saw things in South America or Europe that we've tried here, little pieces that we bring together. And I think that younger generation is going to maybe ... Things move faster all the time, and they're more comfortable doing that. That's why I think they could make this even better than what we got it now.

Andrew Phillips
I have four kids, I have three daughters and then the last one we just had three weeks ago. The last one is my son.

Amity Shedd
Your first?

Andrew Phillips
Yup.

Amity Shedd
That’s great.

Andrew Phillips
But, for me, I really haven't gotten as far as him on thinking of, "Can I turn this over to one of them or multiple of them?" More what I've kind of always thought in my life is that I just want to teach them hard work, respect, being humble. If I can teach those things by them watching me work hard and trying to grow a business from nothing, then if they want to do this, great. But as long as they do something that they care about, that's the main thing from my standpoint of it. I didn't want to be in ag until I was probably a freshman or sophomore in college. And I think if you instill that in them, they will eventually make the right choice where I don't really want to point them in any direction.

To Mark's point about this younger generation being able to communicate through social media and different ways than what we communicate with, he's absolutely right. I mean, I see it. It's not even close. Most of the time, when a son comes back into an operation or multiple sons or daughters, when they come back in, I end up usually calling the younger generation because they pick up their phone, they will communicate with me very crisply and to the point. They will answer my questions, and they listen really, really well. I mean, they listen very well. Where I'm of the age that when I'm talking to 50-, 60-, 70-year-old guys, a lot of times they don't have their cell phone on them. They don't care if it's anywhere near them. So, it's just a different level of communication altogether.

I think I'm a little different from the standpoint that I'm young, and I moved back into a rural area that doesn't have a lot of young people. So what he's saying is there is a next wave of us, but there are fewer of us, and we're going to have to be able to do more with less. And you have to be better at communication, you have to be better at technology, you have to be better at efficiencies. So there's just a lot of things for the future of ag that are kind of up in the air. But a lot of it is just getting young people and families to come back and to be a part of the community and make it what we grew up in.

Mark Schleisman
And I didn't think of this a lot when I was younger, but as I get older, I see organizations also being a big benefit in that. I mean, like the Soybean Association or the Corn Growers Association. Especially with that older group of farmers, they're not comfortable communicating, but those organizations are avenues and have resources that are very good at communicating. And I think that's a big plus. And we saw that, I think, through the whole Des Moines Water Works lawsuit and getting through that, whether it be that organization trying to educate the growers on what the issue is, but also kind of being the intermediary between the two because all their headquarters are in Des Moines.

Andrew Phillips
That's great. That's a great idea.

Mark Schleisman
You know? Yeah, they live there.

Andrew Phillips
Yeah, right. Right.

Mark Schleisman
But they're on the farmer's side, and they see both perspectives really easily. So they facilitate that conversation that I was talking about earlier. There's a place for those organizations, too.

Amity Shedd
Cool. This conversation was so interesting. Thank you for taking the time and sharing it with us. Is there anything else you guys want to add?

Mark Schleisman
Appreciate your time.

Andrew Phillips
No, we're starting to dry up. It's time to actually get something done.

Mark Schleisman
Yeah.

Andrew Phillips
I know this planting season's been kind of a tug of war.

Mark Schleisman
Hope we can plant tomorrow.

Andrew Phillips
Yeah. Right, right. Before the next rain.

Amity Shedd
Well, thanks so much for joining us on this episode of Channel Chat.

I learned a little bit of everything talking to Andrew and Mark today, whether it was about farming, agriculture, their businesses and even the environment. These guys have a lot of knowledge in their areas of expertise, and we definitely wish them the best of luck this season.

Now, I'm going to toss it over to grain marketing consultant Matt Bennett. He's going to give us some advice on basis management and how a producer can incorporate that into their marketing plan.

Matt Bennett
This is Matt Bennett, the grain marketing consultant for Channel Seed, and we're going to continue our discussion on basis today. I want to talk a little more specifically. We've already covered some of the basic stuff as in basis is widest whenever there's the most grain around. And basis is tightest whenever we have off crops, whenever we can't access the grain, especially maybe in certain areas.

And so, how does a producer use this in their marketing plan? First of all, as a producer, I've got to understand that if I know I'm going to need money in the middle of harvest, I've got to realize that the basis is likely to be very wide. And typically speaking, futures price is fairly weak during harvest as well, especially if it's in a typical year. The reason for that, of course, is that there's more grain readily available in the market. It's not out there searching for grain. So if I know I'm going to need money during harvest, I need to be having some of those sales made before harvest rolls around because a really rough time to make the decision to make grain sales is going to be right in the middle of harvest.

Do I sell or do I store? It's an emotional time, and quite frankly, we don't always make great decisions when we're highly emotional. And so, after harvest, how does basis act as the year goes through? In the 2018 calendar year, the closest commercial to me would be Decatur ADM. During the middle of harvest, they were running 35 under basis. So 35 under the December, and then as harvest went along, it was only about 10 marketing days. And we saw that basis actually go to option price, the December. So, yes, their basis actually improved by 35 cents in a matter of a couple of weeks. It was a very interesting move to see, but by all means, we saw a couple of different things happen. As harvest wound down and they were trying to access some of the bushels that were coming in toward the end of harvest, they had to increase their basis.

And so some of the local elevators, of course, followed suit. So, if I'm a producer and I know I'm putting grain in the bin, I want to stop and think about what my basis will be able to do to me close to harvest. So, as you move through the calendar year, this year was very similar to many of the years we've seen. And in fact, a lot of the years where you have very tight stocks, basis can sometimes catch fire and you can actually have over the market. So, basis is the difference between cash and futures as we've talked about before. But you might be looking at the market, actually, locally being higher than what it is on the Board of Trade whenever you're in a very tight situation.

So a producer who has bins, one thing that we like to advocate is selling when there's carry in the market, which means the futures price is worth more further along in the year than what it is today. And in 2018, the difference between December futures and July 19 futures, actually at one time, got up into the mid-20-cent range. We told producers to sell that corn, and then as you move forward, once basis gets better, that's when you want to sell your corn. And so one of the best times for producers to, or the best ways for them to make money off of their bins is to essentially lock in the carry in the market and then turn around, wait on basis to improve for them, and make the sale whenever the basis is strongest.

So, as we wrap up this discussion on basis, the things that I want you to remember is that you can use basis to your advantage. We should listen to what basis is trying to tell us because typically, basis can mean quite a bit to us as producers in that if we can harvest just a little bit more out of the crops that we're storing and putting in our bins at home, sometimes it can pay huge dividends for us on down the road.

So, once again, this is Matt Bennett, the grain marketing consultant with Channel Seed. And I sure hope that you'll get back to me with any sort of questions you have and be able to learn something from this discussion on basis that we've had. Thank you.

Amity Shedd
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