Why should you be using the Horizon Pricing Program with Ag Hedge Desk?
What is this program? Why is it offered? How is it different than the ROF program?
The dairy market is more volatile than ever, with unpredictable and wavering prices. With more dairies closing year after year, doing nothing in regards to risk management just isn’t an option anymore for a dairy that wants to be successful. Weathering lows has become extremely difficult while the highs are less consistent. These reasons are why Ag Hedge Desk has developed hedging programs for a dairy’s feed costs, making revenue more consistent and helping get through those low times.
The Horizon Pricing Program is the newest consulting program provided by Ag Hedge Desk. It was referenced some in our previous post Why You Should: Hedging with ROF, but Horizon Pricing is a hedging program similar to the Revenue Over Feed Program we also created.
Horizon Pricing has a few differences from ROF that we think are greatly beneficial to our customers and we hope to get everyone over to Horizon Pricing eventually. The key aspects of our Horizon Pricing program is its focus on the future for hedging, usually 9,12, or 15 months into the future, and the hands off approach for our customers. With Horizon Pricing, there’s no need for our producers to pick a trade date anymore, trying to get the best time and price. With this program, a producer simply chooses the horizon (9,12, 15 months out), the quantity to enroll, and the strategy they’d like to use (Price Forward, Price Call, or both). After these three decisions, Ag Hedge Desk will take care of the rest, dynamically hedging their enrolled production throughout the month using optimal strategies we’ve derived from the years of offering Revenue Over Feed. This way, producers can focus more on running their dairy while letting the experts take care of the hedging.
There’s a few reasons the program is offered and why a producer may be interested, in addition to the above listed advantages. Horizon Pricing strives to make hedging as risk management as simple as possible for the producer, while allowing for diversified pricing strategies in risk portfolio. The program, like ROF does, aims to reduce volatility, improve margins, and provide a consistent form of managing risk for producers month after month, while being completely compatible with other programs like Dairy Revenue Protection or Dairy Margin Coverage. To cap it all off, the program is also completely free to enroll in, with producers able to hedge up to 50% of their production with the program.
When it comes to risk management, the worst thing a producer can do is nothing. With great programs out there like this, ROF, and Dairy Revenue Protection to name a few, why wouldn’t someone want to minimize some risk, when there’s so many options?