Ag Concepts in BE
A small office on the east side of Blue Earth is home to big time wheelings and dealings within the business sector.
Ag Marketing Concepts Incorporated began their operation in 1996. They are a commodity based business which specializes in assessing risk management for farmers in the immediate area. Scott Kramer and Mike Schiltz, managers of Ag Marketing Concepts, utilize their expertise in studying various commodities to help local farmers make sound decisions with their money.
While Kramer received his agricultural economy degree from North Dakota State University, Schiltz earned an agriculture business degree from Iowa State University. In addition to their business acumen, this duo also spent much of their youth growing up on farms within the midwest region.
As Kramer grew up on a farm in central North Dakota, Schiltz grew up on a farm in west central Iowa. Their lifelong passion and interest in agriculture gives them a distinct advantage in the business world.
“We enjoy the outdoors in our spare time,” Kramer explained. “I do lots of boating, fishing, and hunting, and I take snowmobile trips in the winter. Traveling a lot helps keep me aware of what’s going on in corn and soybeans, and other commodities. I don’t know what I’d be doing if I wasn’t in the ag business to be honest.”
As one might imagine, dealing with market volatility is always the biggest challenge for Ag Marketing Concepts. Located at 130 South Sailor Street, Kramer and Schiltz advise their clients on everything from energies, to precious metals, to livestock.
In an effort to keep their clients abreast of the latest business trends, both Kramer and Schiltz make themselves easily accessible for each and every client. This means they often take business calls on weekends and afterhours. “We have very understanding wives,” Schiltz quipped.
With the summer months now underway, Kramer explained he is very bullish on the hog and cattle markets because he believes that there has been a recent stage of overproduction, particularly in the hog industry. However, with the demand in meat being very high during the summer grilling season, Kramer views this as a positive sign for the livestock market as a whole.
“[Meat] packers are making really good money in hogs right now. Their margins per head are probably $20 to $25 per head right now. There’s a pretty decent margin for the packers. Seasonally, we start seeing a slump in numbers during this time of the year because the weather gets hotter so weights go down. It’s all kind of a supply and demand thing,” Kramer said.
A recent agreement to export American beef to China will undoubtedly send massive ripple effects throughout the U.S. livestock market. With China having a total population in excess of 1.3 billion, it is easy to see why this could be an exciting development within the United States livestock industry.
“We have ordered 56 to 58 tonnes of whole carcasses, which are expected to arrive by the end of July,” said Chen Fugang, owner of Aoyang International, according to an industry web site.
As the world’s leading automobile market, China’s impact extends into the precious metal sector as well. Palladium prices have increased by over 8 percent in the past month alone. The connection between China and this industrial metal has to do with palladium being used in the construction of catalytic converters, which serve as emission control devices in automobiles.
“Palladium has just kind of taken off; it skyrocketed. In China, their economy is growing and everyone wants to own a car, so they are trying to clean up their environment somewhat. That creates a lot of demand for palladium. The price of palladium went up and stayed up,” said Kramer.
“China is always an exciting market because the population over there is huge. Any small change in China can make a big change on the overall demand on a global scale,” Kramer added.
Naturally, not every market can experience a boom at the same time. When it comes to gold investments, the past 12 months have been fairly disappointing. In July of 2016, gold surpassed $1,350 per ounce. In June of 2017, gold is hovering around the $1,240 range.
Gold is typically an investment that is made as a hedge against future inflation. However, with no runaway inflation in sight according to the most recent Federal Reserve meeting, the value of the precious metal is in decline.
In addition to gold, the crop industry has also experienced its share of turmoil. As most area farmers can attest, the corn and soybean industry has been lagging behind for an extended period of time. Kramer contends that corn and soybean farmers can hardly make much of a profit under the current price structure.
In fact, Kramer noted that August of 2016 set new lows in the corn market. While corn has gradually worked its way back up since that time, soybeans have fallen even further behind the pace in terms of profitability. Understandably, Kramer believes that corn and soybean commodities are the two most unprofitable ventures that Ag Marketing Concepts deals with.
“With corn, it’s probably break even at best for farmers, depending on what their yields are. Soybeans are below break even right now. Percentage wise, there is a lot larger drop on soybeans,” says Kramer.
Regardless of what type of volatility exists within the ever changing marketplace, the main interest of Ag Marketing Concepts is to protect their client’s bottom line.
Ag Marketing achieves this goal by encouraging their clients to either make sales via a futures contract, or sell a contract to hedge what their production is whenever market prices dictate. This basic and practical approach to money management has allowed Ag Marketing Concepts to stay in business for over 20 years.
“We don’t necessarily call it investing, what we try and do is hedge for farmers, and that’s our primary business,” said Kramer. “If somebody wanted to hedge their retirement fund by buying a metal; against some sort of collapse in the stock market, we can certainly do that for them,” Kramer continued.