Jennie-O Turkey Store Purchases One Millionth Bushel of Corn Online
Date Posted: April 5, 2004
Owatonna, MN--Owatonna, MN corn grower Bob Swedberg, one of more than a several hundred registered online producers was the farmer who sold the one millionth bushel of corn recently over the Internet to Jennie-O Turkey Store, using Farms Technology’s www.farmstech.com Dynamic Pricing Program (DPP).
Francis “Fran” E. Felber, Manager, Ingredient Purchasing for Jennie-O Turkey Store, Barron, WI says, “At Jennie-O Turkey Store we decided to take the crawl-walk-run approach to the DPP.
"Many companies have tried to trade grain over the Internet in the past, so we moved very cautiously.
"We used it internally first, then introduced it to a few producers, and it has organically grown into another way of conducting business with our producers.
"We introduced it at one feed mill last March and now have it operating in all eight Jennie-O Turkey Store feed mill locations, and the producers who choose to use it, love it.”
Bob Swedberg says, “I think I sell more to them (Jennie-O) quite a bit more now than I did before.
“Look at how volatile the markets have been. The corn might be up 7 and then close down 3, but if I've set the price it hits in the system, it's sold.
"I don't have to worry about things as much.”
Swedberg says, “It makes you think more about your marketing. What sales price will I be satisfied with?
"It takes some of the emotion out of it.
"For people who don't make a written plan, it's at least a step in the right direction.
"That's one of the things that kills a lot of people...emotion.
"It hits the price you thought you'd be happy with and then you hold out for more, and maybe miss making as much as if you'd sold when you'd planned.
“If I had a chance to, I would sell all my grain online.
"I’ve recommended it to some of the different buyers I sell soybeans,” Swedberg notes.
“I hope they take a look at it. To me it just makes so much sense. It's so convenient.”
Jason Tatge, CEO, Farms Technology, LLC, acknowledges that he’s actively searching for a soybean buyer in the Jennie-O Turkey Store trade area where they’re now buying corn.
“We’ve got more than a couple of hundred corn growers who, like Bob (Swedberg), also raise soybeans.
"Many are asking us for the opportunity to sell their beans online, as they are corn.
"We’re doing an online survey to gather the number of bushels of soybeans they raised last year, and are planning to raise this year, so soybean processors will be able to see what a no-risk opportunity this would be for them.”
Swedberg continues, “It doesn't take high-speed connection to make it work.
"I've got dial-up now. I think the fastest I connect is 28.8.
"There are many more things about DPP that are very useful, the ability to see basis levels, see graphs of the intra day and historical price movement, etc.
"I think it will get even better when I've got high-speed access.”
"The price charts and historical data load much faster at higher connect speeds.
"Perhaps the biggest benefit of high-speed broadband Internet access will be no wait-time dialing and connecting to view current market prices.”
Swedberg adds, “I really like the 24/7 access. I can look at what their bids are.
"I can put my offers on the Internet when it works best with my schedule. It's the simplicity.
"I'm on my computer two to three times a day, every day. I'll check the bids and decide what I want to do.
"It's very direct and very quick. I'm not wasting time tracking prices down. That's the thing I like most about it.
"Even though all companies have an 800 number, by the time you call them and they get on the phone and you've found out what the price is...IT JUST TAKES TOO LONG. This is MUCH easier.
“I really do enjoy selling grain this way,” Swedberg says with a smile.
He received a $150 Cabela’s gift certificate from Farms Technology, LLC for selling the 1,000,000 th bushel of corn online to Jennie-O Turkey Store.
Tatge says, “The DPP really isn't about using ‘the computer,’ it is about a more efficient way to market grain.”
He continues, “Traditionally, grain buyers stand in the middle of the transaction, communicating Board of Trade prices to the producers over the phone.
"This is a method that works, but is limited by the nature of being a human (two ears and one mouth).
"If every grain-buying organization could afford to hire a buying staff to work 24-7, you still have the limitations of being human.
"The DPP seamlessly connects the producers to buyers and to the Board of Trade values.
"Producers put the highest demand on grain-buying staffs when the market is moving quickly, which means many of them have to wait on hold to speak with a buyer, but prices don't stop moving when producers are waiting on hold.
“On the other hand, the DPP can communicate with thousands of customers at any given second, and provide them with instant feedback in the form of a cash bid that they can execute online instantaneously.
"Many other agricultural websites show cash values, but require the producer to come to their website, look at the prices and then pick up the phone to make transaction (cash bids are subject to change without notice).
"A website that can't execute transactions is one-way.
"It would be like going out and buying a pager today rather than a mobile phone.
"One-way communication is a thing of the past.
"I enjoy it when producers call up and say, "I don't know anything about the computer, but my neighbor told me that I can sell grain on it at my price if it gets there, and look at my offers at night. Can you show me how to do this?"
"The DPP will never replace the phone in grain-buying offices, but not giving producers an opportunity to sell this way, if they so choose to, could be very costly if the competition decides to use it.”
Felber continues, “The majority of our corn grower-suppliers simply want to see where the market is and has been.
"This allows me and my staff to take fewer inquiry calls and to concentrate on helping those who demand more attention.
"My suppliers can access the market information any time of the day. They like the site.
"This builds loyalty to our company, Jennie-O Turkey Store.”
The site also gives registered sellers access to historical cash and basis information for each delivery period, to help them review where the market has been and might be going.
“The biggest benefit is that the producers want this type of information.
"They want it and somebody will be providing it. I figure I want to be their first-choice market.
"If I am not, then I want to be second, because if they choose to switch, I will be next.
"A large number of the spouses are making selling decisions.
"Many spouses are comfortable with the system,” Felber concludes.
Farms Technology, LLC’s www.farmstech.com is continuing to add new features and services to the DPP, which registered producers are requesting.
In January 2004, new Average Price Contracts were made available for producers.
Tatge says, “Average Price Contracts are truly different than what the industry is accustomed to.
"We allow the producer to customize the pricing periods, pricing days of the week, and even the pricing times of the day.
"And if they want to lock in current basis levels and/or price the remaining bushels on the contract, they can come online and do so, when it is convenient to them.”
Tatge concludes, “We were fortunate to find a visionary company like Jennie-O Turkey Store, to launch an initiative like this in the wake of the agricultural dot-com failures of 2000-01.
"They let us introduce the product at one facility last March and have just announced the availability of the DPP at all eight of their feed mills, allowing corn producers to sell them grain directly off the farm 24-7.”
Swedberg adds, “Despite the dot-com failures, I was willing to use the DPP initially, because of my high degree of trust in Fran Felber and Jennie-O.”
Felber says he feels, “Personal relationships with grain buyers are not replaced, but rather service is enhanced utilizing Farms Technology’s DPP online grain buying software.
"We can do a better job of buying corn and managing seller relationships in less time.”