Progressive Ag of Fargo, ND was named the top marketing firm in the country for the third straight year by the AgMas Marketing Study. AgMas is a USDA sponsored program that evaluates the ability of marketing firms across the United States. The study is conducted by Dr. Darrel Good of the University of Illinois and Dr. Scott Irwin of Ohio State University. Sponsors of AGMAS include:
* Cooperative State Research, Education, and Extension Service, US Department of Agriculture"The fact that Progressive Ag was the top marketing firm the third year in a row is indicative of our new, rigorous analytical program we have incorporated since 2001," states Ray Grabanski, President of Progressive Ag. "Since we added our export, yield, and price models to our marketing programs, we have become much better at forecasting the market," adds Grabanski. Grabanski states that the most recently completed AgMas year was 2003, but in 2004 Pro Ag had their best year ever. "We fully expect to top all marketing firms again in 2004, but those results won't be out for another year."
According to Grabanski, the models they have incorporated have kept them abreast of the most recent developments in the marketplace. "Knowing if the crop gets better or worse each week during the growing season makes all the difference in the world. I can't imagine making marketing decisions now without the yield models we've built," adds Grabanski. He feels the more rigorous the analysis, the more profitable the decisions are. "Knowing that a 1 bushel rise in US corn yields can drop prices 4c is very important to the evaluation of an acceptable price."
Grabanski explains that the models are continually updated each year to take into consideration new developments in the industry. "For example, when the European Union added 10 new former eastern bloc countries last year, that drastically changed the wheat market outlook. You needed to lower your price outlook considerably," explains Grabanski, "As the EU subsidies were expanded to 10 more counties, it created more competition for wheat exports." Grabanski cites another example as the change in the soybean loan rate. "When the loan rate was higher than corn/wheat, the soybean price outlook dropped 25c/year due to increased acreage - with no change in supply/demand numbers," adds Grabanski.
The AgMas study is the most comprehensive study of its kind in the United States. "AgMas is pretty much accepted to be the most unbiased source of the evaluation of marketing firms. Just search on the internet for AgMas, and you'll find that most marketing firms accept the USDA sponsored results as their report card," states Grabanski.
The marketing firms evaluated by AgMas include virtually all of the largest and most
well-known marketing firms in the country, including:
"I think its interesting that of all the big name marketing firms in the country, the best is located right here in North Dakota," provides Grabanski. "I think that not only says something about our state, but also the quality of people that come from here." Grabanski notes that virtually all of his staff is from small towns in North Dakota and northern MN. "We are now getting customers from China and El Salvador and all over the Corn Belt. They tell us we should stay right here, as that way our judgement doesn't get clouded by living in the big cities of Chicago, New York, or even Minneapolis." These customers are quick to note that everything that happens in ag happens in the field, not the big city.
The AgMAS project has a goal of developing an objective and comprehensive analysis of the performance of agricultural market advisory services. The relevance of the AgMas project is far-reaching, as the project directors state:
"While producers place a high value on market advisory services as a source of market and price information and risk management advice, they have little time or ability to objectively evaluate the large number of advisory services that are available. An objective, third- party evaluation provides valuable information to producers in selecting an appropriate advisory service. The annual pricing performance of services alone can be very valuable information for producers. However, the AgMAS project goes well beyond that objective to include measures of risk, predictability and, uniquely, a comprehensive performance profile of advisory services. Producers can use this profile to select an advisory service to match their own marketing style.
"I don't think the AgMas sponsors expected any firm to continually show our type of performance the last 3 years, dominating other firms. I attribute that to the new analysis program Pro Ag has," provides Grabanski. Grabanski notes that at universities the Random Walk Theory (a theory that no one can predict markets effectively) has many followers. "One of my best buddies in Graduate School at Iowa State is now a market researcher for a large commodity fund, and he no longer believes in Random Walk Theory. I wonder why?" Grabanski muses. One of the most remarkable results it that Progressive Ag has topped all marketing firms 3 years running in soybeans. "Getting the best revenue for corn and soybeans combined 3 years running is nice, but to top soybeans all 3 years was a surprise, even for me."
Grabanski states that although the AgMas recognition is nice, probably the greatest reward is sending millions of dollars to farm customers at the end of the year. "Recognition and Awards are nice, but we must not forget what we really are in business for, our customers", adds Grabanski.
According to the AgMas directors, the results of the AgMAS Project address one of the major price risk management challenges of corn, soybean, wheat and hog producers. The results should be of particular value to small- and medium-sized producers who may lack the resources to develop comprehensive price risk management tools and strategies to remain competitive. In addition, the results are expected to provide the empirical foundation for new innovations in pricing contracts offered to producers.
Grabanski feels their role as a market advisory firm is to provide the research, analysis, and decision-making on ag markets for their customers. "We consider ourselves hired labor, specializing in marketing and risk management. If our firm can do the market research/analysis, and one person executes the marketing for 20 farmers, that's much more efficient than every farmer doing the same work." Since farmers are strapped for time, Grabanski feels the specialization of labor is important. "Its just not practical for every farmer to spend the necessary time to analyze the markets." Grabanski adds that he typically will spend 2 hours per spring/summer day just analyzing the weather. "It's a job that has to be done, as weather dominates summer markets."
Grabanski notes that Progressive Ag has started a performance based marketing program called Whole Nine Yards. "We market the farmer's grain for him to get the best price with the least risk, and our pay is based on our performance. If we don't outperform the average USDA price, there is no fee for our marketing service." If Pro Ag does well, they get paid based on how much they beat the average farmer price. Grabanski suspects most customers see there is no glitzy sales pitch in this approach. "We put our money where our mouth is."
Grabanski adds that the marketing program needs to work with the crop insurance revenue program. "Many producers buy revenue insurance, and don't follow up with a marketing program that works with it. One of the saddest things about 2004 is that many producers missed a risk free opportunity to lock in guaranteed profits with no risk. That is exactly what the revenue insurance was supposed to allow producers to do, but the sad truth is that most insurance agents or companies have no way of getting the job done. They sell producers the product, but don't carry out its greatest benefit - marketing well." So Progressive Ag and Grabanski have an ambitious program to help alleviate that problem. "We currently have one of the largest independent insurance agencies in the country. And we train our agents to integrate marketing with the insurance products they sell." Grabanski claims their ability to integrate both is what makes their insurance agency so successful.