Market price is defined as the current price at which a product can be bought or sold. Market price happens at the point where the forces of supply meet the forces of demand. With the demand side of the potato market relatively constant, the potato grower’s economic health depends almost entirely on the supply side. This is good news because, since the grower owns the supply, he can and should manage it to his best advantage; that only makes sense. But as owner of the nation’s potato supply, the grower assumes significant financial risk. The assumption of such high risk begs the question: What information must the grower have to most effectively manage this risk?
The cover of the recently best-selling book, Outposts, features a lonely phone booth sitting on the end of a dock perched over the ocean, the theme being one of isolation. This insular phone booth compares well to today’s potato seller—grower, salesman or packer/shipper—charged with maximizing the current crop’s value with the information presently available to him. The only truly reliable information available to the seller is the price of the prior sale, and who can say that even the prior sale was priced properly? Pricing the next sale happens after sifting through assumptions gained from talking with buyers and brokers, each of whom has his own biased motives and objectives, or glancing through AMS’s hearsay system.
While assumption is not fact, assumption is all the seller has in his attempt to “determine the market price.” The buyer, on the other hand, inundated by a constant stream of offerings, makes no such assumptions; the market price is daily presented to him! Take a wild guess at who is disadvantaged in this relationship. But what are the seller’s options?
The seller’s option today tears the walls off that lonely phone booth, placing its occupant squarely in the midst of the actual potato market, its price and direction. Columbus discovered America; Edison discovered the light bulb; Salk discovered a vaccine against polio. But Agricultural Market Analytics LLC (AgMA) discovered how to present, by region, by SKU, real market price, its direction, and every market nuance needed for a seller to achieve a profitable return for the potato grower. While the salesman cannot see how an individual competitor is pricing each SKU, and he knows the competitor cannot see how he is pricing his SKUs, he can see the aggregated price, volume, and number of transactions for SKUs occurring across his region, updated every 30 minutes. Every other potato-producing region can be displayed as well, also by SKU. For the first time in the potato category’s history, true market price and price direction are available—another wonder of the IT revolution.
For the potato grower to prosper commensurate with the risk inherent in planting such a high-input, technical crop (and since risk lies more in the market than in production) he must monitor and dwell within all available market information. While flying by the seat of one’s pants provides thrills and chills, navigating the potato market within the virtual banks of real market data not only pays off the farm’s mortgage early, it produces unmatched emotional tranquility. The future is hereat last.