Strong Marketing Strategies Protect Your Farm From Market Extremes

Regardless of what type of farmer you are, you can only control what you can control. As a producer, you concentrate on what you need to do to grow the best crops or healthiest livestock. Your efforts and focus are required every step along the production cycle.

Marketing, however, is different. Marketing is always looking ahead, although decisions are made based on criteria today. In other words, marketing is attempting to control the future, shifting price risk and/or locking in gains.  

For some, marketing means taking on the role of a price taker, which is deciding to do nothing (by choice or circumstance) and accepting the price when your product is sold. This approach may have a wide variety of results, and exposes you to market extremes. Selling it all at harvest was either a good idea or a bad idea.

Most producers, however, do wear marketing hats. This means focusing on managing price risk and opportunities in addition to concentrating on production. Sometimes, these occur well in advance of production, and sometimes well after. For this article, we’ll describe it as managing inventory.

Why This Is Important

Inventory management and marketing decisions may determine the difference between good farmers and great farmers. For the farmer who is a price taker, the extremes are potentially very large. Few businesses act in this manner. Farming is a business. 

Great marketers educate themselves. They work hard to produce excellent crops or livestock and also work hard to be familiar with marketing tools, alternative marketing strategies, and execution. They strive to make the best decisions, knowing there are no guarantees. Like a good football team, they know their playbook and implement it when appropriate. Not every decision will be right, and not every play a football team runs will be right. Yet, like a well-coached team, consistently analyzing and executing will likely pay off. 

Some farmers recognize their time and talents may be best suited to production and are willing to hire people to manage their marketing. In either case, these farmers are doing their best to control what they can with the most recent information and tools. 

What Can You Do?

You will need to determine which marketing approach best fits you and your operation. Are you willing to commit the time, energy, and discipline it may take to be a good marketer, or would you prefer to concentrate on production and pay someone to market for you? There isn’t a right or wrong answer. It might be trial and error until you find the right rhythm. Risk management and marketing will likely never take a day off. However, with consistent and strategic marketing, you might find you are able to take days off, knowing you are steadily prepared for market moves. 

Editor’s Note: If you have any questions on this Perspective, feel free to contact Bryan Doherty at Total Farm Marketing: (800) 334-9779.

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy, or discipline will guarantee success or profits. Any decisions you may make to buy, sell, or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

About the Author: With the wisdom of 30 years at Total Farm Marketing and a following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of brokerage solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the tools and markets, listens, and communicates with intent and clarity to ensure clients are comfortable with the decisions.