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Preparing A Marketing Plan
Bill Havertape, cofounder of Midwest Strategic Investments, Inc., and well-known grain marketing commentator based in Cedar Rapids, Iowa, says a majority of today's producers are production experts but are not marketing experts. Therefore, without a plan in place, teamed with the kind of tools now being used to manage risk, they settle into the emotions of greed, hope, and fear to sell their crops, said Havertape, speaking at the 2010 Soybean Plant Health & Profitability Conference sponsored by EMD Crop BioScience.
Too often, these three emotions play a continuing and predominant role in the decision-making process.
To avoid this scenario, Havertape, who was born and raised on a grain and livestock farm in northeast Iowa, says it's wise to formulate a marketing plan by looking at the fundamentals and shooting for prime target prices.
Once you have compiled this information, Havertape suggests that you put it into a package that works for you.
"With my clients, I want to start the plan in January after the final crop-production report comes out," he says. "The goal is to look at intended acreage, put in enough gross revenue to pay the bills, and target specific times that synchronize with past history to sell the crop while it's growing in the fields."
A Sample Worksheet
Havertape looks to glean certain information from each client. Following is a sample fill-in-the-blank worksheet he has clients complete.
- Intended acreage for each crop is __________ acres.
- Each acre should average __________ bushels per acre.
- Gross revenue per acre to break even is $__________.
- In an average year, the producer will need $__________ per bushel to break even.
- The producer will feel comfortable using __________% of a normal crop for a marketing plan.
"If I can get my clients to agree with this plan, they will be 65% to 75% where they need to be. And they will avoid the helpless situation of greed, hope, and fear when they market their crops," he explains.
4 Steps To Successful Marketing
To become a successful marketer, Havertape suggests taking these four steps.
- Come up with a plan on paper to trigger sales of old and new crops.
- Rely on lender support/credit to properly execute the plan. Having a third-party agreement provides an extra layer of supervision and discipline.
- Gain knowledge of available market tools and how to properly use them. Try to find the tool that fits what you are trying to accomplish.
- Find a reputable marketing adviser who is familiar with agriculture and is on the same page as you.
"It takes dedication, discipline, and time to stick with and to execute a marketing plan," says Havertape. "Over time, my goal is to build a self-sufficient marketer who's able to manage risk in a disciplined fashion."
Midwest Strategic Investments, Inc.
373 Collins Road NE, Suite 208
Cedar Rapids, IA 52402