The Ohio Cargill Ag Horizons group is starting to offer free-on-board (FOB) programs first for wheat this summer, then for corn and soybeans later this fall.
“The program is designed for farmers to be able to price grain FOB their farm. They are basically pricing their grain at what the price is delivered from their bin, which eliminates finding trucks and negotiating rates,” said Joey Johnson, Origination Merchant for Cargill Ag Horizons.
For farmers, the major advantages include not having to find trucks to haul the grain, eliminating waiting in line at the elevator, more attractive rates and saving time. This will allow Cargill to be able to buy grain from a larger area.
“We’ve been trying to buy some grain FOB to widen our footprint and get grain from further away,” Johnson said.
This summer’s wheat harvest will be the first major use of the program.
“Many farmers treat wheat as a cash crop, so they don’t market wheat like we would corn or soybeans,” Johnson said. “A farmer normally just looks at what their local market is and takes that price. This lets them take advantage of markets they might not normally sell into and get a higher price or participate in an alternative making program Cargill offers. Or it’s attractive for those farmers that treat wheat like a cash crop and don’t want to get the wagons out and just make life easier while getting more money for it then they would in their local market.”
In terms of the geographic area this program will be offered, Johnson said they’ll look at any offers, but they’ll be most competitive within the area 30-minutes from their locations in Bloomingburg, Lima, Cincinnati Kellogg and Circleville.
Cargill will have a fleet of trucks out during wheat harvest picking up wheat from fields and bins. They plan to utilize their assets and backhauling from their various locations to provide attractive freight rates.
“The minimum of what we’ll be looking for is 800 bushels of wheat for field pick-up, which is roughly 15-acres of wheat,” Johnson said. “We’ll be looking for farmers who have grain carts and can quickly fill up a semi. For others, we’ll work to pick up the grain from the bin in an arrangement that works for both the farmer and us.”
A new FOB coordinator has been hired. Matt Hagedorn, who was an origination merchant, now focuses entirely on FOB. He coordinates the backhauls and truckers while working to provide the most attractive freight rates.