Advice to a farmers’ cooperative to protect their prices.

A farmers’ cooperative from the northwest of Spain is going through its second year of poor wheat and barley harvests. They envision that prices for both grain types will be significantly influenced by the imports market this year, and they need to guarantee their selling prices somehow. They want to understand how their local market is related to the international one, and to have the necessary tools to be safe in determining the selling price of their grains. How can they protect their prices?

1. We analyze the situation of the cooperative, what the prices of grains are in their area, how they are affected by the import market, and the relationship of their prices with the futures markets.
2. Together with the cooperative, we discuss the best way to manage the market risk for a seller of barley and wheat.
3. We design a customized plan, explaining how their local market is connected with the international market for wheat and barley, as well as with the futures market.
4. According to the plan, we show how to calculate prices and other basic concepts. We also explain how to operate in the futures and options market, to guarantee sale prices.
5. We accompany the cooperative in their risk management and closely follow their progress so that eventually they can become autonomous and take full advantage of market opportunities.

• The cooperative can deal with imports and optimize its sales.
• The cooperative is better able to quantify and manage its risks.
• The cooperative is capable of securing its prices and operates with confidence in international grain markets, having learned how they function.