Honesty and objectivity are absolutely non-negotiable when it comes to marketing. Only through objective analysis can you know if your marketing decisions are adding to your profits. A useful gauge is if your price is above the average price for your area if you’re a seller, or below the average price if you’re a buyer. An easily obtainable comparative price is the monthly and annual cash prices reported by the US Department of Agriculture, National Agricultural Statistics Service (USDA, NASS) for the US and individual states.
You need to enjoy marketing to be good at it. When you fail – and even the best marketers fail often – enjoyment is a reward that eases the negative feelings that come with failure.
If you don’t enjoy marketing, set up a simple marketing plan that roughly gives you the average price for your area. Getting the average price for your area will keep marketing from hampering your competitiveness and will reduce stress so you can improve other skills. One often-mentioned simple marketing plan is to sell or buy 2% of production or inputs every week over a year. Also see the last section of this article.
Year-to-year consistency has benefits. Part of your marketing plan should involve pricing at roughly the same time each year. Consistency averages out random price swings, which can be large. It can also support other parts of your business. Specifically,
Coordinate marketing with known cash flow needs to avoid desperation trades at bad prices. Common cash flow needs are payment of taxes and buying inputs at roughly the same time each year to capture routine seasonal deals and manage taxes.
Coordinate marketing and storage. Research finds that average returns over time to both cash storage and storage hedged with futures track storage average storage cost over time (see Figure 1, a reprint of Figure 1 in the farmdoc daily of September 9, 2020 and Zulauf and Kim, 2020). See the two articles for more in depth discussion of the data, analysis, and findings.
While storage profit are small in general, storage can facilitate other benefits. Buyers can buy at harvest when prices are typically lowest. Crop farmers can harvest faster with less field loss. Harvest can continue if off-farm outlets are closed. When making marketing decisions on stored crops, be aware that you may react differently to the cash cost of commercial storage than to the already-paid storage cost of on-farm bins.
Source: illinois.edu
Photo Credit: gettyimages-eugenesergeev
Categories: Illinois, Crops