known as The DRC® pricing tool. The DRC pricing tool is a pricing strategy tool that is offered by buyers or sellers to their trading partners. A significant assumption that underlies the DRC pricing tool is that markets for commodities and products that are widely traded in agricultural markets such as grain, grain-based ingredients or livestock behave in a "random" fashion. The markets we know in agriculture and the food industry are a model of efficiency. They compile all the information and knowledge of traders, businesses and producers from around the world and express this data in the form of a price. The market is all-knowing. Consistently outguessing or outperforming it is impossible.

The nature of Ag markets leads many of those in the market to throw themselves at the mercy of it. But risk management--the foundation of effective marketing--isn't about controlling uncertainty, it's about managing it. Perhaps most importantly, it's about managing emotions that influence and shape decisions. At its simplest level, the DRC pricing tool enables customers to partcipate in the market every day. It removes emotion and automates the decision-making process that far-too-often hinders effective pricing and/or marketing.

The DRC pricing tool has been offered in the grain market since 2000. For grain elevators that offer the service to their producers, the DRC pricing tool takes the guesswork and emotion out of pricing grain for producers and enables them to select a pricing strategy appropriate for them that can be managed online. The DRC pricing tool offers an attractive risk management value proposition to producers while grain elevators use the tool as an innovative origination tool.

E-Markets currently offers five algorithm-based pricing tools that provide a variety of strategic pricing approaches, ranging from conservative to aggressive. When used in portfolio approach, two or more of the models can be combined to deliver a pricing strategy to fit each producer's style of doing business and risk profile. Elevators can generate reports for each producer listing pricing dates, futures prices, delivery periods and number of bushels priced. Together with the daily purchase report, this provides just the level of detail grain buyers need to keep accurate, up-to-the-mintue records.

The DRC pricing tool does not alter the basic mechanics and relationships fo conventional forward contracts. Rather, the DRC pricing tool is a sophisticated, yet easy-to-use pricing tool that is linked to real markets and automatically prices an amount of grain each day on the basis of the conditions specified in the DRC agreement.

For more information, take our DRC pricing tool tours, or check out our brochure. Also read our DRC interviews of how it worked for customers like The Andersons or Senior Grain Merchandiser Don Konz.

Decision Rules for Contracts (DRC) Pricing Tool, Patent Pending