Futures Farming

Grade Level: High School

Approximate Length of Activity: One to two class periods

Standards

1. Demonstrate an understanding of marketing farm commodities by selling corn represented by M&M's® candy) for a profit.
2. Demonstrate the ability to equate simple math functions, i.e., multiplying, subtracting, and adding.
3. Observe the challenges a farmer faces when marketing corn by completing a hands-on activity.
4. Define the following terms: commodity, acre, bushel, futures, expenses, profit, and crop.

Introduction

A lot of planning goes into the sale of a farmer's crop. In order to make the most money, a farmer must predict when he will receive the best price for his or her crop, even before the crop is harvested. This is called “futures” because the prediction the farmer makes is based on the future. The futures market can be both complicated and risky. In this activity, students will see if they are good predictors with their “crop” in hopes of making the most money.

Share these definitions with your students before starting the activity:

• Futures: Commodities or stocks bought or sold upon agreement of delivery at a later time. A farmer only gets paid when he or she sells a crop. That payment may only be once a year (after harvest in November) or if he or she sells the crop before it is harvested – “future.”
• Crop: The total yield of agricultural produce in a given season or place.
• Commodity: A commercial article, especially agriculture or mining product that can be transported.
• Acre: Portion of land about the size of a football field.
• Bushel: How the crop is measured; can be measured by weight or amount.
• Expenses: Items the farmer must pay for in order to stay in business. Examples: electricity, gasoline, taxes, chemicals.
• Profit: Amount of money made after expenses are paid.

Materials Needed

• “Futures Farming” worksheet
• 1 bag of M&M's® candy (1.4 oz., usually found in the checkout aisle in most grocery stores) for each student
• Calculator (optional)

Activity Outline

1. Introduce the “Farmers Dilemma” activity by reading the introduction at the beginning of this lesson. Then place the terms given in the introduction on the board or overhead. Define the terms as a class or have the students do this individually.
2. Pass out the bags of M&M's® and the worksheets. *Do not open the M&M's®! Using their worksheet and candy, students need to estimate how many M&M's® of each color they think might be in their single bag before opening it.
3. Move on to Step 2 on the worksheet and have students multiply their predictions by 3. Green M&M's® will be multiplied by 5.
1. Once the students have their totals, they now have bushels of corn that they can sell.
2. This is a good time to talk about how many bushels of corn a farmer produces in one acre.
4. Discuss the term “futures” that the students defined earlier. A farmer has the opportunity to sell his/her crop before he harvests it. For example, if the farmer thinks he might have 150 bushels of corn to sell in the fall, he might sell 100 bushels ahead of time at a higher price.

Why wouldn't the farmer want to sell all 150 bushels at the better price? Answer: There might be a drought, flood, or wind damage that could hurt the farmer's yield OR he or she might not harvest 150 bushels of corn. In order to make money that farmer must have the number of bushels he or she sold ahead of time otherwise he loses money. It is like borrowing money...someday you have to pay it back. *Remember the farmer is taking a risk like the students are doing with their candy. Imagine taking a risk with thousands of dollars, not just candy.

1. Complete Step 3 on the worksheet.
2. Have students open their M&M's®. *No snacking yet. Complete Step 4 on the worksheet. Students may eat their candy when the directions on the sheet indicate to do so.
3. Complete Step 5 and finish the activity.

Discussion Questions

1. How many of you realized that a farmer only makes money at certain times of the year?
2. How is the method of payment different than when some of your parents receive their paychecks?
3. What are some school subjects a farmer must be familiar with or understand well?
4. How would budgeting funds come into play in a farmer's family life?

Related Activities

Introduce the term “grain elevator” which is where the farmer sells his corn. If possible, have an elevator manager come and speak to the class or arrange a visit to a grain elevator.