Growing up a devout Southern Baptist, I don’t know much about casino gambling. I’ve heard my mom tell stories about her childhood and how playing cards was just as sinful as drinking alcohol. Now that I’m an adult, I believe that those activities are ok in moderation. I have only been to a couple of casinos in my life, but I jumped at the chance recently to go to Tunica, MS, with friends.
A friend told me to only take the amount of cash I was comfortable losing. I took $200, and parked myself in a smoke-filled area of slot machines. By late afternoon I had $50 left. I put that $50 into a quarter slot machine, bet the maximum, and 45 minutes later I cashed out with $480. I then quit for the day and went to see my friends at the roulette table. My friend said the calculated odds of winning are better at the tables.
I’ve heard that farmers are gamblers, but it doesn’t have to be that way. With gambling, I feel that I have no control over my destiny. However, farming doesn’t have to be like betting all of the chips on a red 7. I’ve realized that a better focus on marketing is one of the best ways to take the gambling out of farming. I can’t bet the farm on black swan events that cause commodity prices to spike or crash.
In 2014, unhedged cattle feeders made hundreds of dollars per head. In 2015, some of those same feeders went out of business due to the market crash.
Year after year, I hedge most of our cattle at the time of purchase. In grain marketing, I project average yields and start to make forward sales at prices that make sense. A good crop insurance policy gives me confidence to make early sales.
In the hay business, I start selling in the summer and spread sales until the next spring. In retrospect, I should have stored hay until this spring because prices have jumped. But, I can’t base my grain and hay marketing plans on a drought.
Gambling is a game of chance bets. Farming is a game of hedging our bets.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.