Posted on May, 31, 2024 at 09:34 am
Most growers admit marketing is one of the most – if not the most – challenging part of their operation. What makes it so challenging?
There have been countless efforts to quantify that question. To put it simply, anything that has to do with money seems to make life complicated. As farmers, we can certainly get ‘married’ to our crops – and prying them out of our own hands can be challenging, even for the most-savvy growers.
So, how does a grower stay disciplined in good markets and bad alike? This is another topic we could spend days discussing. I’ll share what I’ve learned over the last 20-plus years of working with growers.
The most basic key to being a good marketer from my vantage point is to always know what you need to get out of your crops to make the money you need to make. I call this a ‘break-even’.
I bake in the necessary income to cover my expenses, including living costs. I project a realistic production level and work hard to establish all costs spread out over the farm. When I know what I need to get out of my crop, it simplifies the marketing process.
The next key is to keep current when analyzing our break-even and financial situation as the season progresses. If we see our costs increase or go down, keeping those numbers realistic is paramount.
One big item to remember when marketing a crop that isn’t to the finish line is to keep yield forecasts as current as they can be. Given the thermal imaging technology and improvements in agronomic analysis, a grower can have a solid estimate of production potential once they get safely through pollination and assess the moisture situation.
The last thing I’d like to share that I’ve seen make a big impact on growers is to go back and benchmark what profit margins looked like before the rally or the setback.
Keeping our perspective on how things look today versus how they looked before has made a big difference for the growers I work with. Sometimes, we may get irritated with $100-an-acre net profit due to a year like 2021 or 2022 when we saw big profit margins. However, I would rather see $100 per acre of profit versus losing money – and I think we can all agree on that.
So, the 2024 crop is an interesting one to apply these principles. Given big profits in ’21 and ’22 as we just discussed, the ’23 crop was certainly a challenge for many.
With big input costs not going away for the ’24 crop, many producers have struggled to find black ink. This is where it’s uber-important to have our costs nailed down to a T. On the production side, IF you made it through spring planting in good shape and have great prospects, be sure to adjust yield prospects accordingly.
One last thing about applying these thoughts to the ’24 crop is we must sometimes realize how much things have changed.
While I’m hopeful we don’t see an ‘ag recession’, there are certainly signs that could occur. If you can lock in some worst-case scenarios that keep your shirt intact while building in flexibility, I believe that would be a great way to approach our marketing here in 2024.
I know many of you haven’t started planting or are far from being finished. I hope the rest of your spring goes smoother than it has so far.
Keep safe out there.
Source: Farm Progress