Can Australian farmers sell grain better?
Are you getting full value for your grain?
This may be difficult to answer. The reality is there are often better prices available for your grain than you may realise.
If you consider the way most of Australia’s grain is sold currently, the inefficiencies in the process are glaring. Common practice is to wait for buyers to advertise their bids for the day and then react to it.
Searching for bid prices distributed by buyers can be time consuming and hard to manage. If the buyer is not familiar than the associated counterparty risk is unknown. The result is just a handful of buyers typically buy the majority of the Australian crop from growers in any region.
At Clear Grain Exchange (CGX) we're trying to encourage as many buyers as possible to try and buy your grain while making the sales process easier, more secure and more enjoyable!
Every day we strive to make its easier for buyers to find sellers and sellers to find buyers, creating competitive tension for your grain. What's more, every trade on CGX is securely settled keeping all participants protected in the process.
By doing this we create an efficient grain industry where all participants benefit.
Do you create a price or accept a price?
How do you sell your grain? Have you ever thought there has to be a better way of doing it? When you sell, do you create a price or accept a price?
Growers that accept a price typically wait for buyers to advertise their bids for the day and then react to it. Its time consuming, complicated and not fun.
Growers that create a price offer their grain at the price they desire, allowing all buyers to see it and try to buy it. They create demand for their grain. Its simple, secure and enjoyable!
Lets explore these grain selling behaviours and how you can transition to being a price creator.
Most growers accept grain prices
Many growers wait for buyers to advertise their bids for the day and then react to it.
The waiting and reacting behaviour often creates angst because growers are thinking “should I sell grain today or hold”, “will the price keep going up?”, “I wish I sold some grain on that last price spike!”.
When they do decide to sell, they then need to engage buyers. This is often done via the phone or email.
Bids that are advertised by buyers are typically “indicative”. That means growers need to negotiate to get the buyers real purchase price.
They then want to check the bid against a number of other buyers to make sure it’s a good price. This means calling or emailing other buyers, negotiating and often waiting for a response.
The buyer with the highest bid is the one they go back to for one last haggle before selling the grain. Sometimes the bid can be withdrawn because the buyer has got their fill and pulled their bid lower.
They are then forced to revert to the next best bid and hope that it is still available!
The process is clunky, inefficient, and often results in growers or their agent dealing with only a handful of buyers because that is what they can manage.
Sometimes it means missing the price opportunity all together. Buyers often become frustrated and feel like they’ve been played off in a Dutch auction.
When the deal is finalised, it is regularly done via a “verbally” binding contract over the phone.
A 1,000t sale at $450/t is a $450,000 transaction completed over the phone in a verbally binding contract, reliant upon each party making notes on either side of the phone and then providing confirmation in an email which is hopefully correct.
If we’ve got this far, growers now have to transfer title of their grain to the buyer and wait for payment as an unsecured creditor.
Once paid, growers may then receive additional paperwork from statutory authorities asking them to declare varieties to pay end point royalties, or possibly levies and other grain selling costs.
Growers then manually enter the contract details into their accounting software being very careful not to make an error.
No wonder many growers find selling grain stressful!
It’s better to create a price
Rather than waiting for a handful of buyers to tell you their price and reacting to it, you can take the initiative and create a price.
Have confidence to tell all buyers the price you’re willing to sell for, by simply offering your grain for sale on CGX.
When you create a price with CGX, you give all buyers the chance to see your grain and try to buy it. Buyers can see the volume, grade, location and most importantly the price you want for your grain while you stay completely anonymous.
This gives buyers more opportunity to crunch their numbers and try to buy your grain.
The process makes it easier for growers to find buyers with the highest willingness to pay for their grain. Often your grain will sell at much better prices than you may otherwise have thought was possible.
So how do you create a price?
Simply offer your grain for sale on CGX, an independent and secure grain exchange. Its free to have a CGX account and free to offer your grain for sale and you can cancel your offer at anytime before it sells if needed.
There is no downside in giving CGX a go, we only charge if your grain sells - $1/t (how we make money) + the costs of secure settlement ($0.20/t-$0.62/t depending on where you store your grain).
If you are a bit unsure of your sales price, start higher! You’re anonymous at all times, so no price is a silly price, and you can reduce your price at any time if you wish.
Creating a price means all you need to worry about is what price you want for your grain. All buyers can see your grain and try to buy it, your grain automatically sells if your price is reached, you retain title of your grain until funds are paid, you remain anonymous through the whole process, and all paperwork is digitised, instant and recorded in your online account.
If you remain sceptical of trying a new way to sell your grain, lets take a look at some details.
Why you should use Clear Grain Exchange
The best bit of feedback we get from Australian growers and their agents is that they enjoy the simplicity of selling grain through Clear Grain Exchange.
In the last 12 months 101 different buyer businesses bought grain through CGX. 65 in NSW, 54 in VIC, 43 in WA, 31 in SA and 21 in QLD.
We’re confident more buyers want to try and buy your grain, more than 300 are registered on the exchange and ready to buy your grain.
3,625 growers used the exchange last season and sold more than 3.1 million tonnes through CGX. Another 1.5 million tonnes was securely settled by CGX in addition to what traded on the open online screens.
If you use a grain broker or marketing agent, they can also use the exchange to sell grain on your behalf. The exchange makes it easier for them to get your price in front of as many buyers as possible so they can continue to focus on adding value to your business.
It costs nothing to have a CGX account set-up and nothing to have your grain on offer. Plus you can edit or cancel your offer for free at any time before it sells.
There is only a cost for using CGX if your grain sells, and we always say to factor that cost into your price.
Our secure settlement service guarantees that you keep title of your grain until you're paid and you’re anonymous at all times.
If you use CGX correctly, it can only add value to your business!
Let’s work together to create a more efficient and sustainable grain industry where as many buyers as possible are trying to buy our grain.
The growth in the exchange is due to the value generated by growers and their agents offering grain for sale to all buyers and creating a more sustainable industry for their grain.
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