Market volatility has been and continues to be a common theme in agriculture.
Many factors can drive the market in different directions. Some of the factors that affect agricultural markets are the strength of the dollar, weather conditions, supply and demand, government policy, and global trade agreements.
Farm business plan
A fundamental question is: What can an ag enterprise do to manage market fluctuations?
The answer depends on the type of operation — dairy, beef, poultry, swine or crops; but a good farm business plan can also help.
A farm business plan should be completed by every operation regardless of size, and it should be reviewed on a regular basis. Such a plan affords the opportunity to develop business priorities and establish goals to create a strategy to leverage resources for a nimble, successful and sustainable business that can withstand market volatility.
Developing a farm business plan is even more vital if you are entering into a new farm enterprise or business. It will help navigate the tough questions related to the market outlook for your product by including market research.
The word “research” might evoke a feeling of fear, but it does not need to be a complex process. Research can be as simple as following the market trend or price, or as complex as looking at case studies and evaluating data from ag economists.
A farm business plan should also help establish a brand and logo. Brands and logos are two mutually exclusive items. Seth Godin, founder and chief executive officer of the direct-marketing company Yoyodyne, said it best: “A brand is the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another.”
A logo helps consumers recognize the developer or creator of the product. A logo should be unique and created for your business, and should accompany all business correspondence such as business cards, signs, brochures and emails. Being consistent by using the same logo for all communication allows for greater market recognition. Even items such as the color and graphics can make a significant impact on consumers.
Farm business plans are one step in the pursuit of creating a prosperous operation. They will help a farm business move forward in creating approaches to cope with market volatility.
A good plan will take time to develop. Time is always the limiting factor on any farm, so do not procrastinate, as there may be no better time to review or create a farm business plan than the present.
Mills-Lloyd is the University of Wisconsin Extension ag agent specializing in dairy and livestock for Marinette and Oconto counties. This column is provided by the University of Wisconsin Extension’s Wisconsin Beef Information Center. Learn more at fyi.uwex.edu/wbic.