Has your marketing plan centered around on-farm storage, making sales based on price movements or cash flow needs? With a bull market sending prices higher, with no clear indications how long it will last, is it time to ‘level up’ and start working with a marketing adviser? Here’s some advice from a range of experts:
Naomi Blohm: Hiring an outside adviser to assist with grain marketing is helpful. An extra set of eyes and ears to help keep you updated on possible price movements will help the bottom line of your operation.
First, know your needs and explore what might be holding you back from your best marketing. Is it emotion? Do you struggle with pulling the trigger on those cash sales? Do you feel knowledgeable about the marketing tools available to you? Hiring a market advisor who takes time to get to know you and your operation can help take you to the next level. — Blohm is senior market analyst with Total Farm Marketing.
Jerry Moss: Improved marketing is principally about reducing risk and avoiding dumb mistakes. So how do you minimize your downside or lost opportunity risk? Lots of eggs in lots of baskets. Diversifying your marketing is just common sense smart unless you know you have superior winning skills at slot machines or roulette. Multiple marketing advisors, multiple marketing programs, and multiple big league end users are all part of our program.
Here’s what we learned the last 12 months: Utilize a two-year marketing window for each crop to help avoid selling too much, too early, or too late, at one time. And quit living the pipe dream that more personal marketing skills automatically equates to higher prices. — Moss is farm manager at American Heartland Ag
Joe Camp: An adviser can assist with the development of price outlooks and execution of marketing plans. They should have an opinion regarding the general outlook for markets being managed, but more importantly, should be able to help customers form their own opinions about price potential.
Customers should expect advice that is tailored to their individual situation and not part of a one-size-fits-all approach. Advisers should help stress test risk management plans by reviewing the expected performance of customer strategies under bullish, bearish, and neutral market conditions. — Camp is director of managed programs at Commstock Investments
David Widmar: Do a quick assessment of your current process.
- What works well? Don’t abandon what works for you.
- What are the challenges or shortcomings? Get specific.
- What are the true needs? More insights or access to more tools/products?
If you sincerely need help don’t pick a partner that doesn’t truly meet your needs. For example, if a grower needs help using future or options, a daily newsletter, however good or valuable, isn’t going to meet those needs.
Improving a farm’s marketing requires an investment of time from the farm managers. Even if they are working with an adviser or third-party, it will take time to establish and maintain those relationships. Producers need to consider upfront how they plan to allocate more of their time.
Lastly, always focus on how to improve your decision-making process. This is even relevant when we hire advisers. For example, was it a “good decision” to sell corn/soybeans in June and July 2020? If we aren’t careful in how we make and evaluate decisions, we’ll default to evaluating only the outcomes. — Widmar is an economist and co-founder of Agricultural Economics Insights
Nathan Thompson: What we have seen in the last 12 months certainly brings marketing risk management to the forefront. In particular, how to best lock in favorable price opportunities but also leave room for upside potential. Doing this in a high price, high volatility environment may require looking beyond traditional marketing tools or strategies. You don’t have to overcomplicate your marketing plan, but it does mean you need to understand and utilize the tools that best fit your situation and risk management needs. This may require outside help.
I teach the senior-level farm management class at Purdue and one of the things we talk about is the fact that time is often our most limiting resource. Farm managers wear a lot of different hats. Consider making informed investments in service instead of trying to do everything yourself. For example, many farms will hire an agronomist, animal nutritionist, etc., but only 21% of farms currently use a marketing adviser according to our research. I highly recommend setting aside a budget for marketing costs. For some, it may be just a subscription to a marketing newsletter to help them stay on top of markets; for others it may be a one-on-one consultation with a marketing adviser to help craft the details of a marketing plan. In either case, each farm has to figure out what has the highest return on investment for their farm. — Thompson is an economist at Purdue University