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Developing a Grain Marketing Plan for Your Ag Operation

Date: 
Author: 
Matt Roberts
Educational Opportunities: 
Videos
Interests: 
Grain, Young, Beginning Farmers
Home > Education & Events > January 2019 > Developing a Grain Marketing Plan for Your Ag Operation
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When I talk to farmers about grain marketing, something I like to talk about is what does it mean to have a marketing plan? Almost every farmer says they have a marketing plan if you just ask them, but then when you really start talking to them, often times their plan consists of ‘sell at high prices’. They wait until prices are good and then sell. That's not really a marketing plan. Let me tell you what a marketing plan is. The first thing, is to start with why should you have a marketing plan? What's the point of a marketing plan? And my point's really simple. A marketing plan exists to protect you from yourself. 

    There's a lot of thought errors whenever Ag producers are trading in markets, whether its stock markets or commodity markets, they make a lot of the same mistakes. The best way to reduce those mistakes is to have a marketing plan that is written down for you follow, that’s consistent. It's created through a process. So when we talk about a marketing plan, the first thing, is that it needs to be written down, just like you would your business plan. It needs to be written down, it needs to be specific, and you need to look at it, evaluate it, and look at your actions at least every month if not every week. 

    Of course in a quick video we can't go into all the detail, but what makes a good marketing plan, starts with your balance sheet. Understand how much equity you have, how much risk you can afford. In addition to knowing your working capital, how much cash can you afford to lose before you have to start restructuring your equity? And know your cost of production. What's a profitable sale? There's a lot of people in the Ag industry who tell you, “Hey, I can make a marketing plan, or you can subscribe to my newsletter, and I'll tell you when to sell,” but they don't start with knowing your farm and the characteristics. They don’t know the costs, your equity, or your working capital; and without those things that's the same as getting a prescription from a doctor who knows nothing about your medical history.

    A marketing plan has to be written down and has to be detailed and specific to your farm. If you're not doing those things, then it's time to stop, step back, and ask yourself, “How can I do better? How can I put what I'm doing down on paper and start moving forward?” Once you do that, the benefits of it, not only from a marketing perspective but from a stress perspective, is hard to understate. 

    If you create the correct form of a marketing plan, and that is a marketing plan with price targets, price windows, selling targets, you're going to have the freedom to sit at the coffee shop and when one of your friends asks you if you saw what the market did yesterday, you can sit back and say, “Nope, I don't care because my broker's worrying about it. The elevator's worrying about it,” and you get to worry about the things that you can control on your own farm. That's freedom.
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