00:00:00 We're talking about risk management here at Commodity and classic and no, I'm not with one of the crop insurance companies. 00:00:04 I'm with a crop input company concept Ag agritech. You know what? Things are kind of tight in agriculture. It's no secret. Here we are, March of 20, 25, 00:00:11 corn prices, commodity prices. We know where they are. We've got a little challenge on our hands. 00:00:16 But do you work with a company that can actually help you mitigate risk, is willing to work with you and partner with you? 00:00:21 That's something that's pretty exciting that our friend Steve Acker Acker here is gonna tell us about. 00:00:25 You've got a thing called the Market Volatility Program. Correct. And you got a huge fan to your lift and Matt Miles. 00:00:31 But in a nutshell, I know you're a financials guy, not an ad guy. Don't go over the heads of us in a nutshell. 00:00:37 Explain the Market volatility program. Right. So the, the Market Volatility program is basically, it's partnering with the farmer to be able 00:00:44 to lower their prices if commodities drop right, And When, when somebody buys fertilizer from concept agritech, their fertilizer is fixed for the rest 00:00:52 of the year, they're waiting until the end of the year to sell their grain and see where their revenue comes at. We're able to drop the price of the fertilizer. 00:00:59 If corn, soybeans, those prices would decline. We will give you a Rebate back to actually lower the cost of the crop. 00:01:06 So there's been rebates before. Yeah. You guys have all been in the game for a long time. That was a big thing. The chemical companies, 00:01:11 you use our stuff, it doesn't work. We'll give you rebate like Yeah, but I still don't get any revenue off of that crop. 00:01:16 This is not that kind of thing. This is not reating a faulty product. This is reating a product 00:01:20 that we already assume is gonna work. It's reating based on revenue. Matt and I, we can help farmers all day long 00:01:27 with the program of our, the inputs, you know, how to put on foliar nutrition, how to cut a corner, you know, that's all we've talked about at this trade show. 00:01:36 And actually for the last two years. Right. How do we cut? How do we cut what we don't know. What we don't know. 00:01:42 What I don't do, I don't do a good enough job marketing. I don't, Matt does a great job marketing for what you think. 00:01:49 What, is there something, do we have another level? Are we living, leaving meat on the table? Yeah, we are. So what's the next level? 00:01:56 Now we got a company that can help us with risk management across the board. Right. This is huge for us. 00:02:02 You know, everybody across the country is stuck in something like we know that we're good at certain things. 00:02:08 I'm good at X and y maybe. Yeah. But I'm terrible in the office. I know that about myself. I'm terrible with marketing. 00:02:15 I try to rely on other people to help me market, but I need more help. Well, you can paint a quick edge. Good. 00:02:22 You're a good painter. Well, Yeah. I'm a good painter. Good arranges. I'm good with getting dirty. Like all that stuff I'm 00:02:28 Above at, well, no. What And that's what excites me is, is concept. You know, the, the topic this year is not 00:02:33 what a product to make. It's how you stay in business. Yep. I mean there's, in our area alone, there's 20% 00:02:38 of the farmers that won't get a problem on this year. Risk management's a huge deal. Yep. Concept is the first company, if not the only company. Yeah. 00:02:45 I've seen step out there and say, Hey, we wanna join hands with you as a farmer. We're gonna protect your price if price is on your inputs. 00:02:52 Right. Right. And we're also gonna help you if the price goes down. So you're winning. You're not really 00:02:57 winning if the price goes down. 'cause you'd rather the price go up. No, but you're locked in at the input cost. 00:03:01 They're not gonna come in later and say, well, you know, total 10 was $5, you know, a gallon. 00:03:06 And now because we paid more, you gotta pay six. You're locked in at that price when you get into this. So Steve, you came up with this, 00:03:12 your numbers guy, and that's cool. Now the the critic, or it's not the critic, look at the person that's questioning is gonna say, that's cool. 00:03:20 Absolutely. But it only rebate is against your part of my expenses. Correct. I've also got my machinery, I've got my diesel, 00:03:28 I've got my manpower, I've got my cash rent. There's a limit. Yeah, Absolutely. I don't 00:03:32 Know that the concept agritech mark of volatility program is going to be the difference between somebody 00:03:38 go going out of business and not. It's, it's helpful, but I mean, I'm sure you've heard some of that feedback. 00:03:43 Hey, this is great, but it's, it's got limitations. Yeah. What's interesting in, in 2024, we looked at, um, 00:03:51 the average profitability of a farmer coming from the, the 2022 crop year where you had the, the, the large increase in commodity prices 00:03:57 because of the Russia, Ukraine crisis and, and looking at the deterioration of profitability through revenue, dropping higher interest rates eroding net 00:04:06 income that that rebate that we would've offered, which would've been about 20, 25 to 27% in 2024, could have been the difference between 00:04:15 profitability and not. Oh. So that's where, so when a person is being, you know, a cynic, you're gonna say, yeah, it's got some limitations, 00:04:23 but also maybe the difference between break even and, uh, and profitability or worship break even and, 00:04:28 and losing money is maybe it's only 40 bucks. Yeah. I I I mean I think it's, it, it, it is pretty much a, I mean, it could be a meaningful amount, 00:04:36 but when you think of, like, think of a sports analogy of like, what's your playbook at third and 15 or third and two and, 00:04:42 and that's where setting these things to be in your favor, even though the inputs is one piece of the business, 00:04:48 we're creating profitability. There. We're, we're going out in the market and using financial innovation 00:04:53 And, And, and being able to, to lock in your ROI and prices are going up because you're, that's secret. Yeah. 00:05:00 Because all of us have a, we do a terrible job and we do everything on emotion. Yes. That's our biggest problem in agriculture. 00:05:09 We do everything on emotion. Everything that we do is emotional. We lose money every day by emotion. 00:05:16 We need something that takes that out of the equation. Right. And this is one of those scenarios in my opinion, by The way, Matt's sitting there said, he says, 00:05:24 I don't get emotional at all. Okay, that's not true. Just stay in a panel. When Kelly made the track, uh, that, uh, a person said 00:05:31 that she was like, just like identical to Matt. He says, oh Lord, that means you got through a lot of arrangement. 00:05:37 He goes through mad, sad, glad fear on about six times day. Mad, sad, glad, fear, mad, sad, glad fear. 00:05:42 He's, he is a rollercoaster emotions. But anyway, you also are very businessy when you look at the numbers. 00:05:48 All kidding aside, this makes a difference and it gives you a protection. Do you see more companies doing this? Uh, I hope so. 00:05:56 Moving forward, honestly. Yeah. I hope they're the pioneer of something, you know, that goes with other companies too. 00:06:01 I just appreciate concept being stepping out there and saying, Hey, we want to help the farmer. What a company's gotta realize. 00:06:07 And I, and I hope they all do. I know concept does without us, who are they gonna sell to? Yeah. Right, right. So if we drop 20%, 00:06:14 they're gonna sell 80% of what they sold the year before. They need to sell more, not less. Yeah. 00:06:18 They're providing a risk management tool that has really no cost to us. No, and I mean, you look back here behind us, 0% financing. 00:06:26 There's a bunch of different options you can get go with interest are 7%, you can get 0%. 00:06:30 It's a no brainer. Yeah. It's Risk management on their end too. Absolutely. They, they're managing all their risks 00:06:37 and they're helping us manage our risks. So it's when for all of us, this thing is not gonna stop here. 00:06:43 That's my base. It is for you guys. I see it constantly evolving. You're just at the front line. Oh, I way better. 00:06:50 I think we just, algorithm might constantly tweak and constantly change. You know, you guys had explained to me somewhat 00:06:57 how your algorithm works and how you guys help with this. That's an amazing pool. Yeah. 00:07:02 That's going to constantly be tweaked. So, you know, is there other companies that are out there that are going to try to go down this road? 00:07:08 Maybe? I, I hope so, but you're gonna be so much further in front. Yeah. Well, and that's why I, I think in, in what we're doing, 00:07:14 we're scratching the surface. I think when we talked about it internally, this is level one of level 10 of what we can do. 00:07:21 And, and, and we're collaborating with other companies in the industry. You know, we're, we're, I mean we're, 00:07:27 we're very forward on what we're doing. I mean, there's no secrets behind it. And if others would want to use this to, to benefit farmers, 00:07:34 like we're, we're all for it. Like, I'll sit down with any other company and talk about what 00:07:38 We're doing. Steve, back to you and your financials background. There's things called hollow offers. Oh yeah, we'll do this. 00:07:43 We'll make you this deal. But if you never have to pay it out, it's just to kind of a neat hollow offer. Yeah. But you've actually paid out on this. 00:07:48 Yeah. Well we, we, this would be the first year we're doing it where we are in our insurance prices. We would Be paying out On that. 00:07:54 Right now. We go out in the market, lock in those prices. It's set in an account the day that, uh, we, 00:08:00 we have a settlement date on that. So that's the other part. The person that's watching is saying, well, wait a minute. 00:08:04 Are they, are they taking this in the shorts or do you go ahead and go, do you go ahead and go out from a financial standpoint 00:08:10 and protect yourself on what might become, oh, We're, we're fully protected on this. That's, that's the innovation. 00:08:15 We have not put concept agritech at risk of this is gonna eat into our margins. Right. We were innovative in the financial side. Yeah. 00:08:21 To be able to go out, they're Using financial instruments to, to do this risk coverage. You're not going to go from Oh yeah, 00:08:28 we had no profit last year because we paid all this money out. Correct, Correct. Best case 00:08:31 scenario is they never give us a dime. Yeah. You know what that means? Market went up. Yeah. So, and that's where, and 00:08:36 and one thing I wanted to add in that is the, the program started as, as an early pay program. And, and 00:08:43 Having This ability, like we locked in the raw material prices in our manufacturing process. 00:08:50 And when people joined, when they were part of the, the market volatility protection, their, their, their input prices, they were locked in their 00:08:57 price sheet as of that date. So corn would go to six or $7, usually input prices would go with it. They're locked in. They're gonna get margin expansion 00:09:04 to the upside because at at $7 corn, their input costs are $4 corn. And then so you, you have, you have the, 00:09:11 the return on investment in the crop going up each way. Our goal there is, is is to, to measure risk. When I traded for my hedge fund, my goal was to, 00:09:20 I wanted equity-like returns. I wanted really great returns for bond-like risk. And that's where shoot for the return, shoot 00:09:26 for the yield could, but also shoot for that by reducing your risk at the same time. And that's what we look at. Cutting back. 00:09:33 The, the view of cutting back is risk reduction. It's actually taking more risk because now you've limited your profit in an environment 00:09:39 Where your Margins are already getting squeezed From the standpoint of the business side of it. Am I paying more for this? No, this ain't free. No. Well 00:09:47 And that's the beauty of there is a cost to us for buying the insurance in the markets and going out there in the markets and buying. So you build 00:09:54 Into the products. Well we, we actually, we created it, we created free money in it, which is, I know that's, that's another one. 00:10:00 Like by going in and, and, and securing the raw materials and doing early discounts with the people 00:10:05 that we buy the products from. We created savings also in manufacturing and in the fertilizer industry. 00:10:11 We, we find the savings in our production. We find the savings in locking in raw materials that you also participate in the lower cost. 00:10:18 If, if commodity prices rise, if input prices would rise, you're sharing in That. Alright, Steve, here, 00:10:23 here's the deal. Yeah. We are in year 2025. Or according to this margins 2025. I, I've got an agricultural economics degree. 00:10:30 I've studied some agricultural history. I think we're gonna be in this trough for a while. Oh yeah. I think that you're gonna have some money going out the door 00:10:36 over the next 1, 2, 3, 5, 7 years. I What is your expectation? You're the one that crunches the numbers. Yeah. Well 00:10:42 You, we, we had a, we had a really nice rally and, and the grains coming from November when we first opened this up, or the, the first tranche 00:10:49 of this win November 15th beans. It was December 18th. Dove all the way down to $9. You know, it was like, oh, we're, we're in it now. 00:10:57 We've had a really nice rally and and the markets have pulled back now, you know, with, uh, the tariffs, uh, the tariffs have caused some, 00:11:03 some volatility within the markets. Yeah. And then you, uh, some of the talks with Ukraine. Um, How many years are you gonna be paying out 00:11:11 Every year That we have to whether, Okay. And then my other question, if I'm tempo 00:11:14 or I'm Matt, do I have to sign up and set my spot price or is that just something that, I mean is there, is there, is there I don't wanna I don't wanna be complicated. 00:11:21 Yeah. If I'm a farmer, what's, what's, what is my responsibility to do this program? Uh, when we first did it was it was based upon an early 00:11:28 pay program and we're gonna open the window back up again. Uh, here, you know, post planting to do this again. 00:11:34 It was based on an early pay program, which we'll even finance that, that gives us the ability to say, Hey, we're go, we're making these products, 00:11:41 we're manufacturing this. We have a commitment, you know, if, if something would happen that you don't plant, 00:11:46 we'll always send the money back. That, that savings that you're creating, um, you we're able to pass that on. 00:11:53 We're already buying the product. Yeah. Right. Yeah. We're already doing it. So we're already invested. We're already gonna do it. Yeah. 00:12:00 It's, nothing really changes. The only thing that's changed is we're gonna name on a TED line and say, this is exactly what 00:12:05 We're gonna do. Sure. Right. So again, I'm gonna say it one more time. Why would we not do 00:12:10 Right and, and, and, and that, that wouldn't be really clear to me. Like, we're never locking up the funds. 00:12:15 Uh, if you decide that, you know, like we have guys go into preventative planning, we send it right back. 00:12:19 It just gives us an idea of what we're manufacturing. We're And you said it best. We're reducing our risk in the equation. 00:12:25 We're reducing your risk in the equation. We're taking synergies within the market to lower prices and bring risk 00:12:30 Management. I need one more thing. All farmers, all of us need something to take a little bit of heat off of us. 00:12:37 Oh. So we're not so worried all the time. Yeah. This is as great of a tool as any I could play. I I love it. I like the historical 00:12:43 example. Market volatility program concept. Airtech. You guys are both participating in it. 2025. Absolutely. Got it. I don't know what you did wrong. 00:12:52 Everyone on this entire booth is wearing a concept shirt and they don't even give you a liar. No shirt. I, I 00:12:57 Look, I, I flew in yesterday. My, uh, my son won his, uh, high uh, hockey. Hey listen, he doesn't I think Yeah. 00:13:05 Bean counter go over there and punch, crunch some numbers for us and know you get a Shirt. I'm so boring. They 00:13:10 don't want me in a concept shirt. So It's, so we're coming at you from commodity classic 2025. We got Steve Acker, the Market Volatility program. 00:13:16 The company called Concept Agritech is you wanna learn more about this and you're looking at your crop inputs 00:13:20 and you want a partner that will help you with risk mitigation. This is a really strong start. Is a really strong start. 00:13:25 Where do they go to learn more about this, Uh, concept? Agritech our webpage. Reach out to our DSMs. 00:13:30 Uh, easy to find this, uh, social media or the Web concept. Agritech is with a TEK, not a CH. 00:13:36 Um, also you should check out at the Grainery. That's the show happened at my farm with the guys from Extreme Ag Concept. 00:13:41 Agritech is one of our business partners and they also came there. They sent Daniel Hensley up there. He liked it. 00:13:47 He's way more entertaining than I Oh, I wouldn't say that. I wouldn't say that He liked it 'cause he spent time 00:13:51 with me. It really wasn't enough. Yes. Until next time, as Temple Rhodes. That's Matt Miles. Is Steve Acker. I'm David Mason. 00:13:57 Coming at you from Commodity Classic 2025 from the concept Tiger Tech Booth. Check it out. Thank 402 00:14:00.885 --> 00:14:00.965