Six Steps to Good Marketing

• September 18, 2009
• Paul Neiffer

First off, an update on why there have not been any posts for a few days.  I went on a four day backpacking trip into the North Cascade Mountains of Washington state.  This is some of the best scenery in the whole United States.  I went with a friend that was in my wedding many years ago and we had not done this type of trip for several years.  I had a great time, lost a few pounds and did not get bitten by too many bugs.

After getting back, I found out my computer’s hard drive finally crashed on me.  I had another computer to replace it, but it took several days to get it up and running and will probably take another few days to get it exactly the way I want it.

For the current post, Successful Farming recent September 2009 issue has a very good article on the six sucessful steps needed to be a good marketer of your grain.  This article was written by Alan Kluis, who usually contributes a monthly article to the magazine.

The six steps are as follows:

1. Know Your Break-Evens – A good marketer will know exactly what is break-even point based upon price and yield.  They are willing to make sales when they get to a price level that works.
2. Be Consistent – A good marketer is consistent.  They sell about 40% – 60% of their crop in the key April-to-June period when seasonal trends are usually the best.
3. Make Sells on the way Up – They are willing to make incremental sales as the market is going up and keep making them.  I see too many farmers try for the exact top and by the time they determine what the exact top is, the market is 10 % – 20% lower and it is too late.
4. Be Disciplined – They are willing to sell when the market is bullish.  They have a sense of history and know when to sell and will pull the trigger to sell.
5. Use Seasonal Odds – These farmers tend to not sell in the low seasonal periods, but rather, wait until the normal seasonal high periods to sell.  They take advantage of new crop hedges, cash sales or put options to lock in these prices.
6. Use a combination of tools – They use a combination of risk management tools.  The majority of them take advantage of CRC or RA insurance.  They will tend to insure their “A” bushels which is the core crop yields and use put options to get price protection on their “B” bushels.

All-in-all, this is a very summary of what all farmers should try to obtain in their marketing efforts.

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