Platforms like Combyne (formerly FarmLead) and CXN360 have given farmers a chance to see a much wider and deeper array of bidders and prices for grain than before.
Previously, the open market mostly existed on unconnected grain company websites, within brokers’ offices, and through lots of phone calls.
CWB grains were both simpler and more opaque, depending upon whether a farmer was willing to just accept the eventual payout from the board, or was willing to leap through the hoops of buybacks or producer payment options.
The online grain marketplaces have offered a window into the dynamic prairie crops market that has existed but wasn’t before nearly as visible. Never before has it been so easy to see the array of buyers across the region and the different ways they value and demand crops.
But has their time already passed?Mark Johnson would have you think so.
“I declare Oct. 12, 2021, as the day that the grain marketplace died,” announced GrainBridge chief executive officer Mark Johnson in his blog as his firm was acquired by Bushel, a big American agricultural data management firm.
Why is that? Johnson thinks neither grain buyers nor farmers want generic quotes aggregated in an online marketplace, but rather a portal that gets them into the individualized portals of specific grain companies and purchasers, and analytical tools that allow them to assess various offers.
“Grain marketplaces have been trying to build the Amazon of grain for a long time, while Bushel quietly built the Shopify of grain.”
Well, maybe, maybe not. I’m skeptical of anything suggested to be the answer for everybody. If I know anything from covering prairie farmers for 27 years, it’s that the way farmers do production, the way they manage their farms and the way they market their crops and livestock varies widely. There are more differences than similarities.
A few points in Johnson’s blog post rang untrue to me, at least for Western Canada, undermining his argument for north of the border, anyway. He claims that most farmers are only willing to market their grain within a 56-kilometre radius, and that grain elevator managers know virtually all the significant farmers within their zones, essentially eliminating the need for wider marketplaces. From what I’ve seen since the 1990s, western Canadian farmers will market far and wide to get the best price for their grain, and buyers will do what they need to fill their orders, especially if they have rail cars coming in or canola crushing that needs to be running near capacity.
But it’s certainly true that the online marketplaces aren’t for everybody.
Do some farmers want something like Bushel/GrainBridge? I’m sure there are lots, especially if it grows and develops as planned.
Will some prefer to continue to do all their marketing with one main grain company with whom they have done business for decades, or who they rely upon for inputs credit? I’m sure there are those too.
Are there people who will prefer to call their local elevators for quotes and choose from that? I’m sure lots will continue to do so, as they have always done.
Will some use brokers to find the best prices and best delivery windows for them? I’m positive there are.
And will online marketplaces continue to play the important role they have created for themselves post-CWB? I have no doubt about that at all.
Far more people use the marketplaces for intelligence and information than actually contract grain through them, I’d guess. It’s great intel on today’s cash market. And there are lots of types of grain that trade better through the online markets because buyers of specific grades and types are present there but might not be easy to find elsewhere.
Right now, I’m doubting that Johnson is right, but he’s done us a service in making us think about the evolution of grain marketing and its future.
It’s given me a prompt to think about it and also to reach out to the marketplace operators to see what they think. I’m planning to chat with a few of them, and I’ll tell you what insights I glean in my next columns.
