Maximizing Profit

Gavin Merritt’s family has been farming outside Rosalia, Washington for seven generations. He’s always planned on one day taking over the farm, however, he knew he needed some additional education and experience in order to help make the farm as profitable as possible.

Merritt will graduate from the University of Idaho in May 2023 with a degree in agricultural economics: agribusiness emphasis and join Scoular as a grain merchandiser in Twin Falls.

Learning about Risk

Growing up Merritt saw his family struggle with the marketing side of farming. When he learned that U of I offered a certificate in agricultural commodities risk management (ACRM) he saw an opportunity to help his family farm.

“Something that my family farm always struggled with was our risk management, using futures, understanding options so it seemed kind of perfect for me to come here,” he said. “With the certificate, it’s a unique opportunity and really where the money is made is where you know the markets. You need to know how to manage your risk, do all your bookkeeping and understand what you need to make a profit.”

The ACRM certificate allows students to trade actual commodities with real money. Students learn how to develop hedging strategies, understand trading futures, options and spreads, and analyze supply and demand factors.

“The certificate is really unique at the University of Idaho,” Merritt said. “If you want that experience, you need to come here.”

Before students begin trading with real money they practice on a simulation.

“The first time I went through the simulation I had to ask to reset my account twice,” he said. “It definitely changed how I look at certain things and how I approach risk now.”

After the simulation phase Merritt better understood how to read the markets, when to get out quickly and when to slowly move up and make a profit. During his final semester he began trading with real money and his team only recorded one loss.

“There is more risk so you’re more excited when you make money and when you lose money you’re more upset with yourself,” he said.

Another part of the program involves making connections with industry. Merritt traveled to Portland, Oregon as part of a class field trip to talk with grain traders, the Wheat Marketing Center and Columbia Grain ports. He also traveled to Boise as part of a course focused on the Idaho public policy making process where he was able to engage with state legislators.

“Already having those connections in the legislature and in Portland, which is big in the grain industry, is huge,” he said. “The grain industry is very small, especially on this side where you’re really getting your grain from Washington, a little bit of Oregon, Idaho and Montana and there are only about five traders. So, if you can get to know them and build a relationship it really helps out.”

Gaining Experience

In his role as a grain merchandiser Merritt will gain more experience buying and selling grain. He did this to a smaller degree in summer 2022 as an intern at an EGT grain elevator in Montana. He was able to take what he learned through his coursework and what he learned at the elevator and apply it to his family farm.

“I created a cost of carry calculator, added a few more things based on our total interest rate and what our loan was, and was able to make an extra 10 cents just by doing basically the same thing that the elevator was,” he said. “We didn’t go all in on that, which you never really should, but it was a few thousand bushels. Which is nice, seeing your education paying off already.”

Merritt hopes to gain as much experience as he can over the next couple of years but would ultimately like to return to eastern Washington as a consultant to help farmers increase profitability while also taking over the family farm.

“Understanding how to read fluctuations, I can make a farmer say 20 cents just by reading that correctly,” he said. “I have the passion for it because of my family’s story and I was given the knowledge through the University of Idaho to understand and know how to explain those.”