Save Big on Major Input Costs
In this farm economy, you’re looking to reduce costs on anything you can. With fertilizer making up one-third of your input costs for corn and soybeans, this is a great place to start.
Locking in a good price when fertilizer markets move lower– plus buying direct–can help you reap dramatic savings. You also gain control by having the fertilizer supply on your farm right when you need it.
We first outlined the ADM Farm Direct Fertilizer program in Episode 6 of our In the Driver’s Seat podcast. Here to talk more about how this option has actually benefited producers are two people from ADM who work with farmers every day:
Ashley Duehn, Territory Manager, Fertilizer, in Northern Minnesota; and Dale Jackson, Territory Manager, Fertilizer, in Central Illinois.
Here are the highlights from the podcast.
How does ADM Farm Direct Fertilizer work?
Jackson: We’re definitely changing the way fertilizer is purchased. With our model, it’s a direct supply model. You get bulk fertilizer right off the boat, either picked up from one of our inland ports, or trucked directly to your farm along with recommendations on when to purchase your fertilizer for some of the best deals.
Duehn: Another way we’re changing it is, with ADM, you have the ability to get prices up to 12 months in advance, similar to a grain hedge. So if you see a price you like that far in the future, you have the ability to lock that in. We’re also going to give you recommendations on a monthly conference call, on when to purchase your bulk fertilizer.
What does this all mean to me, bottom-line?
Duehn: Farmers are really happy to have another option. So this has given them the ability to buy when they want to buy, spread when they want to spread, and just do business when they want to do business.
Jackson: Basically what that means is we can get you the products you need, at the times you need them, at a very competitive price.
What do the cost-savings amount to with ADM Farm Direct Fertilizer?
Jackson: It’s hard to put a specific number on it because there are so many variables. I think $20 a ton is a very reasonable number that you can see in savings. You could equate the savings in some cases up to $10 an acre. It depends on the timing as well. When you purchase is almost as important as where you purchase your fertilizer. For example, this year was not a traditional year in the fertilizer market and ADM was on top of it. We made a recommendation back in April to lock in a portion of your phosphate needs, and the way the market is trending right now, that appears to be a very solid recommendation. So, when we have that conference call we’re giving you our expert opinion, and helping you buy fertilizer at the best time for you.
What accounts for that savings? Is it a better price per ton, or is it locking in a price in advance?
Jackson: It’s actually a combination of both. If you’re buying at the right time, as opposed to the typical time farms buy fertilizer, chances are you’re going to save money. And if you’re buying it direct in bulk, you’re also going to save. Put those two together, and there’s a lot of money to be saved.
How has the program gone over with producers. Any examples?
Duehn: One that really sticks out in my mind is a producer who was frustrated with the status quo. He couldn’t get his fields spread when he wanted to, he was paying anywhere from $50 to $90 more a ton than he should have been. He came to us and really laid his problems on the table, saying I can’t get what I want when I want, and I’m paying too much for it. We were really able to help him start doing his own fertilizer and save him some money.
Besides cost savings, is spreading my own bulk fertilizer worth it?
Duehn: This spring was a great example of how that time crunch can get so tight for farmers. You really need to be able to get things done when it makes sense for you. That’s why it makes sense to make the investment. You’re not waiting for the fertilizer to get to you, because those few days can be the difference between getting the crop in or not. And with the economics as they are today, those are risks you just don’t want to take.
If I have to invest in on-farm storage and application equipment, will that pay off?
Jackson: I’ve asked all the producers I work with who currently spread their own. They might not have bins, but they have a shed with a concrete floor, a spreader, and a conveyor to spread their own fertilizer. And the average answer of payback time is 2 to 3 years. Now you compare that to a grain bin, that takes 6 to 7 years to pay off, I think most would agree that works.
What if I don’t have any storage space right now, even a shed?
Duehn: When ADM started this program a couple years ago, guys wanted to do it, but where do they put the supply? So ADM went to Meridian and we teamed up with them. We’re offering 0% financing for five years, and that helps you get fertilizer storage on your farm with minimal investment up front so that you can handle the bulk product on your farm.
Jackson: I would like to add that Greenfield also has a program for flat storage, as opposed to Meridian bins. So if your preference is for flat storage, we also have a solution for that, as well.
Duehn: We have all of the major N, P, and K products available. We also have micronutrients and blending available in most of our locations. What really makes ADM different is that we have international and domestic relationships, and trucking available as well. We’re really able to serve the farmer all the way from international distribution to here on the farm.
Jackson: With ADM’s logistics, you would be surprised how quickly we can get to you. You might not need as much storage as you initially thought.
When is the best time to buy my spring fertilizer for 2019?
Jackson: If you think about it, fertilizer is a commodity and it does ebb and flow, similar to the grain market. But, typically, that July to August time frame is the best for fall. It also may be the best for spring. With our conference calls and market reports, we’re going to help you price or buy your fertilizer at some of the best times.
Just watching grain markets is a hassle. How can I track fertilizer prices, too?
Duehn: Nobody has time to sit around and stare at the fertilizer markets–so ADM has made it easy. Just download the ADM Offer Management app on your smart phone or tablet, and you have the ability to see prices at our terminals up to 12 months out.
Jackson: It’s long overdue. For everything else you purchase today, chances are you can Google it and figure out what the price is and what it should be. You couldn’t do that with fertilizer until now.
This program seems to come at a good time, considering how low markets have been.
Duehn: Right. There are rarely times in this industry where there’s a new opportunity for producers. This is a big opportunity for producers to change the way they’re doing things, and not only reduce their costs, but just manage their risk better through these challenging times.
Can I get an estimate on what this switch might mean for my operation?
Jackson: Yes. The best way to go about it is to contact your ADM grain or fertilizer representative. We can come out, sit down, go through the program in-depth, and personalize it to see if it’s a good fit for you and your operation.
Want to get set up for ADM Farm Direct Fertilizer? Contact your local ADM representative.
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