A new marketing program recently was released that will help producers of farm commodities learn price risk management using options on the futures market. Glen A. Arnold, a commodity trade advisor from Cochran, Ga., has developed a program on commodity risk management to teach producers how to hedge their crops for better profits.
“This should be something producers do each year, but most just don't understand how options work,” says Arnold. “Seven Effective Lessons in Commodity Risk Management” teaches the basics of hedging in a way that doesn't take years to learn, he adds.
“Hedging is not the same as speculating,” explains Arnold. “It is a safe, recognized tool used for years by many large corporations to manage price risks.”
Young Farmer Advisor and cotton farmer Jimmy Lane of Berrien County, Ga., says, “This is the best hedging program I've ever seen.”
Arnold, a former aerial applicator, studied futures and options at the University of Georgia and then graduated from both the Texas International Cotton School at Texas Tech and the Cotton Institute at Rhodes College in Memphis, Tenn. He founded Cotton Growers Marketing Association (CGMA) in 1998. Speaking at farm meetings throughout Georgia, he soon realized that a program was needed for all farm commodities on the market, including fuel, cotton, grains, livestock, cottonseed, milk and others.
“Once the mechanics of hedging are learned, the concepts can be applied to a variety of commodities traded on the exchanges,” says Arnold.
“People needed a down-to-earth course that can be learned easily without the complicated technicalities used by many economists. Even though some technical information must be mastered, we've tried to give analogies the help teach in everyday terms,” says Arnold.
“You need as much knowledge as you can get because it's a changing world, and farmers must change with it. If you don't, you're going to be left behind,” says Georgia cotton and grain producer Larry J. Sanders.
“This program is something that was needed. It has helped to fill a tremendous void in the agricultural community,” says Keith Brown, a Moultrie, Ga., commodity broker.
The program includes a detailed study manual, an instructional video and a free one-year subscription to the CGMA Weekly Newsletter. “The newsletter is an important element of the education,” says Arnold. “We don't want to leave people without support.”
Data Transmission Network (DTN), a provider of agricultural/commodity market information, is providing a 90-day trial of their AgDayta on the Internet to use with CGMA's program.
“DTN is vital to this course. With the right training and the right information, this can make a big difference in farm profits. For some folks, it may be the difference between profit and loss,” according to Arnold.
To learn more, visit www.learntohedge.com, or call the information line at 877-520-2462.