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Virtual farmers

June 15, 2002View for printing

Economist's Web game allows producers to buy, sell and trade - with cyber money

By BECKY BOHRER of the Associated Press

BILLINGS - For years, Terry Anvik has sold grain the way most of his neighbors do - he hauls it to the local elevator and takes the price that's offered.

Often, he's lucky to get enough to cover his costs.

"All the cash prices I've seen for the past four years have been below the cost of production," said Anvik, who grows wheat, barley and other crops on his farm near Sidney in northeast Montana. "We've really been struggling to find a good price and have relied heavily on the government to make up the difference."

But a new Internet-based commodity game developed by a Montana agricultural economist is giving farmers like Anvik the chance to experiment with new ways of selling their grain, without risking real money.

The game, called Commodity Challenge, teaches farmers the basics of the cash, futures and options markets. It simulates trades, letting producers practice with phantom cattle and grain allotments, as producers compete to capture the highest prices. Commodity Challenge costs nothing more than the time invested to learn.

Popularity of the initial game, played by more than 400 Montana farmers this spring, led to development of an updated version that uses such real-time trading conditions as up-to-date prices and offers an array of resources for following news and marketing trends.

It also has resulted in expansion of the game beyond Montana to farmers in Idaho, Minnesota, Texas and Wyoming.

The six-month-long game begins in September. As many as 6,000 producers are expected to take part, and the game could be offered nationally as early as next year.

The goal, said Kevin McNew, the professor of agricultural economics who developed Commodity Challenge, is to teach farmers how to manage financial risks - not necessarily to turn grain farmers into commodities traders.

"The thing about agriculture is, you can't do things the way your dad did," McNew said. "Things are constantly changing, farmers have more risk and it's up to them to manage that."

It is estimated that fewer than 20 percent of American farmers and ranchers use futures and options markets - hedging and locking in prices for cattle or grain before actually hauling them to the grain elevator or sale yard. Such marketing is a gamble - both in time and money - but the payoff can be worth it, game organizers say.

Farmers who did best playing Commodity Challenge this spring averaged 15 cents per bushel more on their wheat and barley allotments than other players, said Alex Offerdahl, program coordinator of Montana MarketManager, which helps farmers and ranchers manage financial risks.

MarketManager was spawned by the Montana Grain Growers Association and the Montana Stockgrowers Association.

If such prices were realized on a larger - real - scale, it would mean an extra $3.4 million in profits for Montana producers, he said.

"Producers are tired all the time of hearing they receive all their income from the government. They want to capture more income from the market," Offerdahl said.

"If we do a better job of teaching them to use those markets, farm payments would become less important to them."
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