Know what you want from your marketing program. It’s important in fact that you know it well enough to be able to actually write it down. Without clear marketing goals, you may be heading for frustration. Worse, you may be on a non-stop path to failure.
It’s also important that your marketing goals be realistic, and that they be achievable too.
Otherwise, your marketing goals can be unclear, unrealistic, and unachievable. In other words, they can be exactly the kind of unspoken goals shared by too many farmers all across the country, and there’s every chance you’ll end up with exactly the same prices they get too.
Read Also
Encouraging people from outside agriculture to come on in
In part three of our Making the Future series, Country Guide spoke with Emily McGovern from South Surrey, B.C. (Read…
Marketing any product is much like writing a story. An author needs a well-thought-out outline before attempting to write a great story. Starting your farm-marketing program is no different.
Below are goals that many farmers consider important. One or more of these goals may fit into your grain-marketing program. Some will not.
Goal #1: Selling at the top of the market
This is a common goal for many grain producers. Your total focus is on deciding whether prices have peaked. As discussed last month, however, this is a goal that ignores everything we know about marketing behaviour. It’s a goal that plays directly into the greed cycle, and it’s often self-defeating.
No matter how high a bull market rallies, you’ll always be reluctant to pull the trigger because you’ll always be wondering if the market doesn’t have the potential to give even more. Why? Because no one knows where any market will peak. Remember, markets are only a graph of human emotion. Predicting when bullish speculators will jump ship is a guess at best. This only leads to overblown market expectations and missed pricing opportunities. Predicting the top of a market is luck, not skill.
This goal almost always leads to disappointment and failure. Failure can be taken personally, and it’s easy to get discouraged, with the result that you give up on the concept of scientific marketing altogether.
Goal #2: Selling in the top third
Pricing your crop in the top third of yearly prices is a much more achievable goal. You start by admitting to yourself that picking a market top
or bottom is sheer luck. This is a crucial step in becoming a disciplined marketer. The market has a nasty habit of humbling growers or even seasoned analysts any time they attempt to pick market peaks or valleys. What happens in a market is beyond the control of anyone. Predicting price movements is difficult at any time.
Selling in the top third of yearly prices may seem easy to some and difficult to others. Remember that the majority of growers sell their production in the bottom third of average yearly prices. Fewer than 20 per cent of producers actually achieve the top third.
Also, selling in the top third does not always guarantee a profit. Aboveaverage market bids can still be below the cost of production all year long, and this goal may not be suitable for all crops.
Goal #3: Selling above break-even and cost of carry
Selling above your costs allows you to target cash selling prices that reflect both cost of production and storage. This goal forces the grower to assess both commercial and farm storage cost including interest costs. This means that the longer grain is stored, the higher the prices must be to cover increasing storage and interest costs.
Goal #4: Selling for cash flow
Marketing goals should try to eliminate forced cash flow selling, not justify it. Selling to meet cash flow needs is an important market consideration, but marketing to beat the creditors is “marketing by default.”
The farmer with this goal has little opportunity to target profits. But over a few years as farm net worth builds, cash flow selling may slowly become less an issue for the farm marketer.
Marketing with this goal in mind is no better than loading the truck and dumping it into the nearest elevator pit to receive a paycheque. Lack of advanced cash flow projection and
