Five New Year’s Resolutions for Grain and Livestock Marketing
It’s the time of year to think back and reflect on 2017. The good, the bad, and the mediocre. Time to think about lessons learned, things to be thankful for, and ways to improve going forward. In talking with producers from across the country, below are the top five grain and livestock marketing pieces many have expressed they want to improve upon in 2018.
1. Know Thyself
Often I sit down with a farm family and talk to them about their marketing plan, what’s been working and what areas they need to improve upon. I ask a question that has a tendency to catch them off guard, but it tells me everything I need to know about their situation. “If you were to take on the challenge of preparing for a 5k run, would you rather have a trainer that you meet with a couple times a week to help you work out, or could you have a printed workout schedule and keep motivated to get up every morning and log the miles yourself?” After a few moments of awkward pause because they are wondering what running a 5k has to do with their marketing plan, I explain that the answer tells me how disciplined and self-motivated they are, or have been, with their marketing plan. There is no right or wrong answer. Knowing which category you fall into will help you find the best means, ways, and people to help you improve upon your marketing and sales.
Discipline matters with marketing. It is one of the most important factors. Meaning, are you dedicated to get up in the morning to check your local cash markets daily? Will you invest the time in checking local cash markets and track basis? Will you have the discipline to pull the trigger and make those cash sales when it is at a profitable point? Will you be disciplined about reowning those cash sales with a futures or call option strategy, if appropriate? Some people are good with discipline, and others, not so much. If you fall into the latter category, that’s OK. Just make sure you surround yourself with people who will hold you accountable when appropriate.
Texting, phone calls, emails, and talking face-to-face are all ways and means to communicate with the people on your marketing team. Your marketing team consists of your family, your lender, your broker, your local packer, your grain elevator, and your ethanol plant. Communication is a TWO-WAY STREET. You might think you are communicating just because you are receiving information from the above parties, but for the above parties to help you best, it is imperative that YOU reach out to them to tell them what you need. It’s OK to ask questions. It’s OK to say you need help. It’s OK to say you do not understand. It’s OK to say you need to carve out 20 minutes for an explanation. It’s OK to say you appreciate the electronic communication and, in addition, please pick up the phone and call once in a while. Let others know how they can help or communicate better.
3. Make Time for Marketing
Marketing well takes time and effort. For many, the fun part of farming is working with the livestock, working with big machinery, or improving on yield with precision planting and studying the latest seed genetics and technology. The human reaction is to spend time on the fun stuff or on the part of farming you enjoy the most. That’s great, but selling your grain and livestock is how you get paid for all your hard work. Let’s face it; you are a business. You aren’t working for free. If you want to get paid the most, then you need to make the time to invest in marketing.
Making time means every day you spend 15 to 30 minutes reading the current market fundamentals through various electronic means (email, websites, Twitter, newsletters). You check your local cash markets – see if there is a new trend in basis, think about forward contracting, and call your broker. Ask them if there is anything they see in the markets you should be aware of, and review your marketing plan. Make sure you know where and when you’ll pull the trigger on those cash sales! Consider if any futures or options strategy is appropriate for your marketing plan. Understand how those strategies could affect your overall weighted average price. Scenario plan for potential black swan events that could send the market dramatically higher or lower. Know what your reaction will be should any of those black swans occur at any one point in time!
4. Commit to Learn
If you aren’t feeling confident in what you need to know about marketing, or what you should ask about in regard to your marketing plan, ask! Talk to your lender, talk to your Extension agent, talk to a trusted farmer in your community and ask them their opinion. Call your broker, or find a broker who is willing to make time to teach YOU. Part of making time for marketing is also improving your knowledge of marketing. It might be that you want to learn more about what makes your local cash market move. It might be that you want to finally understand what a put or a call is. It might be that you want to understand the difference between a hedge-to-arrive vs. a forward contract, or you might want to understand which outside market influences affect your local cash prices the most – and why. Make a list of topics, market fundamentals, and other things you want to learn about in regard to grain and livestock marketing. Commit to learning about them in 2018.
5. Cowboy Up
Did I ever tell you about the horse I had growing up? I saved $1,000 and could finally afford Sunny. My mom called him a diamond in the rough; quite frankly, he was just rough. He was 3 years old and barely broke to ride. We both learned a lot about life together. For that first summer, I got bucked off that damn horse every week. My mom would just look at me when I was on the ground, stand over me, and in her encouraging/mean/evil eye/suck it up Mom way she would command to me, “Cowboy up.” I knew what she meant. Get back on that horse and keep working him. Meaning, don’t give up. Don’t quit. Keep working at it. It’s hard and it hurts and it’s not fun and you might be crying. You might be swearing. You might want to throw in the towel, but don’t quit. You can do this!
Farming was a tough year in 2017. No doubt about it. There were two to three times during the entire year where grain prices were high enough to allow for a profit (or close to break even for some). Market volatility has been low. Prices have been low, and many producers have been hurting. Please do keep in mind that volatility in the marketplace (or lack thereof), is not a new concept. Just when it seems like market prices will never rally or come back higher, that’s exactly when the right mix of fundamentals spring into action to allow for a price rally. Make sure you know your cost of production, be ready to pull the trigger on cash sales when the market rallies, have a plan in place to protect profitable prices with a futures or put option strategy, communicate with all members on your team, and make time for marketing – this is how you get paid for all that hard work. You got this! Make 2018 one of your best years!
If you have questions, you can reach Naomi at firstname.lastname@example.org .
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