How to Start Transitioning Grain Marketing to the Next Generation

This is a four-part series on transitioning grain marketing responsibilities that will be updated throughout the year.

Part 1:  5 steps to transition the grain sales process

Earlier this year, when the grain markets were tanking, some farmers went into full-blown panic mode. One Tuesday in mid-January, my phone rang. It was one of our Missouri customers.

“I was too busy to make any grain sales when you did the corn and soybean sales right around Thanksgiving,” he said. “Now, corn is down over 60¢ and soybeans have dropped by $2 per bushel. I kept hoping we could get back to those prices, but it just keeps going down every day!”

By now, he seemed pretty stressed. “I need to get someone else involved,” he said. “This is just too scary.”

I felt bad for him. I could feel and hear his frustration. I knew the family well, and they usually followed every sale recommendation. I also knew they were transitioning the farm, and the day-to-day decisions, to the next generation. They worked well together and had consistently harvested good and great yields. However, they struggled with one tough part: grain marketing, and how to transfer it to the hands of the next generation.

They are not alone. Every farm transition plan needs to outline the grain marketing process and how it transfers to younger hands. The plan needs to make clear who makes the calls, how much grain to sell, to whom to sell it, and what the decision-making process is. It also needs a timeline for when those responsibilities start to move to the next generation.

The changeover doesn’t have to happen all at once, but it has to be very, very clear about who does what. You don’t want the awful experience of saying: “I was supposed to make the sale? Oh, I thought you were supposed to make the sale!” Or the opposite: “Oh no, you made a sale too?”

Are you over 50? It’s not too early to start bringing in the next generation. The timeline and the shared responsibilities can be a relief to everyone.

Today, let’s look at the beginning, with the basics you need for your plan and for your future marketing team. If you are transitioning, here are some suggestions that may help:

Stage one: Prepare to share

Once you need to share responsibilities, that is when you need to have a basic marketing plan, and not just one in your head. Now is the time to communicate your plan to the next generation, and write it down. Yes, writing your first marketing plan is a challenge. But take a few months and go step-by-step. You can do it.

A marketing plan details how you turn your crops into money. You think you grow crops, but you really grow money. The key is how to grow more crops and more money.

Below are template examples. Fill out one row each time you review your plan. The numbers are for your entire farm.

If you have several farms, consider looking at crop production and the value on each.

Stage two: Time to share

Once you have the basic numbers on paper, assemble the members of the future farm operation. Explain you are building a current marketing plan and it is a work in progress and always will be. Start meeting every week to review the plan and update its numbers.

Assign tasks to each member, starting with these first templates: Check the prices, estimate the yields, update the calculations, and update and print the spreadsheet.

It is good to know whether the market is up or down, but it is more important to know how the changes impact your farm’s bottom line.

These little templates are only the first step, but a huge one. They translate all your work, risk, and effort into dollars, and make you and your team aware of how those dollars change every week and every month.

Establish a routine for your meetings. At the end of each, set the time and date for the next. Make these meetings a priority, even when you are busy with fieldwork. Remember: You grow money. Many years, some of the best opportunities to sell develop right when you are planting.

In the upcoming installments in this series, which will appear in the Your Profit section once a quarter, I will lay out the next steps, with more templates for you to fill out. I will help you lay out your plan for how you can control some of your risk, and how you and the next generation can turn those dollars on paper into money in your farm accounts.

Your marketing plan is not just one and done. As the markets and your production estimates change, you need to modify and update your marketing plan. Have an income goal. Watch the calendar, not the news. Be seasonal sellers, willing to make decisions based on what works for your farm, not on what you read on the internet.

You may find that some of your next generation enjoy some of the marketing tasks you assign them. That would be good news all around. Write to me and tell me how it’s going for your farm, as you transition to the next generation.

Part 2: Track your inventory

I see a real need to help readers learn how to do this right. Transitioning from one generation to the next is not easy. Many callers expressed thanks but also told me how scary it is on both sides: the generation handing over control, and the younger farmers’ very scary burden of stepping into those boots and taking on the burden of responsibility.

Readers also told me that writing out the cash and new crop values each week was worth the time. The process of writing down the numbers helped them realize how important marketing is for their farms, and how big the dollar amount changes are, month-to-month.

Now, what should you do next as you work through your farm transition?

Step one:

Keep going. As I wrote in March, this is not one-and-done; this is a long-term project. Someone on your farm needs to keep track of your cash crop and new crop values weekly. Use those tables I provided in my March column as a template. I also think you should update the worksheet or spreadsheet after a major market move.

Step two:

Add another layer — your inventory. Track the value of what is already in the bin, whether on- or off-farm. 

Here is a table template to use:

Part 3: Transitioning farm marketing decisions

Many farmers have told me that my series of articles on how to transition the decision-making process to the next generation are helpful. So, let’s keep going by setting up some initial price and time targets. 

First, what is a price — or time — target?

Think about an archery target. It is something to aim at, written in black and white. When the markets are going wild, it is human nature to get carried along. “Look at those prices going up! How high can they go?” Or “Holy cow, the markets are tanking! Let’s get out now!” 

To manage your risk you have to have a plan before the emotions kick in. That’s the role of targets. You set targets in advance, while the markets are (relatively) calm. You look at the math for your farm operation and decide which prices would let you break even, or better. 

We set targets based on price and time. Price targets are simply prices that are, preferably, above your breakeven. Instead of waiting for the top, you may set a half-dozen price targets at and above your breakeven. As prices rise, you sell a portion of your crop at each target.

Time targets are the Plan B. If you haven’t hit your price target when the target date arrives, then you sell a portion of your crop, regardless of the price. Expert tip: Place your orders in advance, so the sales are done automatically when your price or time targets are hit. 

Targets can be an excellent subject for the next generation to master. It is a life skill, and benefits from discussion, spreadsheets, and some tech tools. Assign target duty to your next generation; making (and updating) targets is truly an ideal exercise for learning how a farm operation can succeed.

Part 4: Farmers Talk Grain Marketing Transition

In response to earlier installments of the marketing transition series, farmers have shared their experiences with Al Kluis. 

I have enjoyed writing my series this year about how to transition grain sales to the next generation. In response, I am getting a record number of phone calls and emails from farmers.

Here are three examples of the phone calls I received:

Call No. 1.

This was a tough one, from a young reader and a second-year farmer. “I cut out your article,” he said. “It opened the door for me to talk to Dad about how we made decisions.” The young farmer said he wanted to start making the sales on the quarters he farms. 

“I have borrowed money,” he said, “and I need to get a lot of my soybeans sold for fall delivery. Dad seemed OK with it. I followed your mid-May recommendation and hedged about 30% of my new crop soybeans with the elevator.” He said planting season was really wet, and they were delayed in getting anything planted — corn or soybeans. 

Then, the hedge contract came in the mail.

“Dad went crazy,” he said. “He told me that I was selling way too much, and he didn’t even know when we would get the crop planted. Dad wanted to buy out of the contract.” 

He and his dad had a brief but intense conversation. “I told Dad I felt like a hired hand with the same last name.” He said his father went to town but was not able to cancel the contract.

He said in mid-June, when it finally dried out, they talked again. “I told him I wanted to get some more soybeans sold,” he said, “and also some corn that I did not have room to store. He said he thought I was being too aggressive and that I would have to deal with it if we came out short of bushels. I backed off some on the bushels I hedged, but at least we managed to talk about it and make a mutual decision.”

I congratulated the young farmer on being willing to try (and try again) to communicate with his dad about grain marketing. He said it was worth it because he wants to learn how to be a good marketer. “The future of the farm depends on it,” he said. “It will all be on me someday.”

Call No. 2.

This was again a very young farmer. She had a detailed budget, and a good handle on her costs — down to the penny per bushel per field. 

She approached her father, and he agreed she could take over the sales on 30% of the crops they would produce. He admitted that he had not done a good job of marketing (and that he found it frustrating). 

The young farmer made several new crop sales when prices hit her profit targets in April and May, but missed making more sales when the market turned lower and continued lower into August. However, the new crop sales she made really helped the farm’s cash flow that fall.  

Call No. 3. 

Another young farmer approached his dad and grandpa about taking over some of the marketing, maybe 20% or 30%. “Well,” Dad and Grandpa said, “how about you just do it all? Just let us know when you want to sell, and we’ll help choose the delivery location.”

Gulp. The young man was thrilled and scared at the same time. 

Letting Go Is Hard

As I listened to the calls, I was reminded that giving up control is difficult. For many older farmers, it can take a profound shift in thinking. But if you are over 50 and want your farm to be successful over the long term, you need to give up some control. You need to train your successor, just as any other CEO. 

I have seen some extremes over the last few years. 

The worst example was a farmer who was 60 years old but could not sell any grain without talking to his dad. The other extreme is just all of a sudden to turn it all over to the next generation when they do not have the experience or confidence to get it done. (This also can happen as a result of death or an accident.) 

Aim for an approach in between these extremes: a gradual, percentage-based transition in making grain sales. That is also a lot less stressful for everyone — including the innocent bystanders.  

Now, Back to Call No. 1.  

When I talked to the young farmer later this fall, he felt a lot better but was still trying to get it done right. “After Dad doubted me in May,” he said, “last week, I heard him bragging on a phone call with a relative about how high he had hedged some new crop soybeans.” He said his dad agreed to let him do a larger percentage next year … and promised not to second-guess him. 

I would call that progress. 

Current Strategies and Recommendations

The grain markets put in major lows in August 2024, then rallied during harvest as global export demand kicked into high gear. What looked like a disaster in August looks a lot better by the fourth quarter of this year. As I write this, South America is off to a good but not great start for the 2024/2025 marketing year. I am a seasonal trader and expect higher prices in March to early June, and lower prices in August through October. 

With the early seasonal lows in August 2024, I also anticipate earlier-than-normal highs in 2025. When I look at 2024, the two worst weeks of the year to make corn and soybean sales were the last week of February and the last week of August. The best time to make sales was during planting time in May. I suggest you avoid any sales in late February or August, and get ready to sell corn and soybeans when you are planting them.

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