As farmers, every year we are facing a choice. To store or to sell our produce? In order to expand on our choices, there are plenty of things we can do. Considering how much storage we have and the costs associated with storing our produce we can make educated business choices. We may have all the best agronomic strategies and technologies for maximum yields. If our marketing is not on point, we may not be able to sell and turn our crops into profit. Adding to our uncertainties are a multitude of factors. Currency turmoil, interest rates, stock market fluctuations, you name it. And most of the times we are talking local, as well as global considerations. So, let us go over the key points to improving our agricultural marketing.
1. Optimal storage
Finding a balance, an optimal amount of yield to always have in storage is paramount. Having too much of it put on hold will eat away at our revenue. Even if we store it locally, on-farm that is, it is still what is called “trapped capital”. On the other hand, having too little of it could be troublesome if a crisis arises. A Goldilocks zone is a carefully and analytically acquired calculus, one custom tailored to every single separate agricultural business. Now, one might be tempted to use a JIT (Just-in-Time) model when it comes to general marketing. In agriculture, it is highly discouraged because many of the aforementioned variables can and will influence the price of the crops. What this means, is that it can often pay to have our yields sit for a while, until we reach a certain price point. When we reach it, and these can generally be predicted with seasons, we sell what we have for a more favorable deal. Typically, prices will reach their minimum around the fall months, because supplies are most available then. Another relevant aspect of managing storage is having control over the produce. We should always be able to move our grain when, where and how we want to.
Having clear and transparent financial numbers and understanding them is key to a successful business. As farmers, we need to be educated enough to recognize which crops make up the largest portions of our revenue. Not all crops will have prices that will provide you with a profit all year round. Most crops are seasonal and so is their value on the market. Knowing which sorts are the most profitable can mean the difference between having a successful or unsuccessful business.
3. Marketing management
Market price updates, local basis tracking and knowing our storage expenses are few out of many aspects of a successful marketing plan. It can be hard for any farmer to take the leap of faith when it comes to selling the produce. Measure the current prices by the expectation you have set in your plan, instead of comparing Australian grain prices to yesterdays. Our marketing plan should include the price, the amount and the date we would like to sell our produce, at minimum. By having these essential details in the palm of our hands we can be more aggressive when setting our prices. That also goes for being defensive when it comes to pricing. Basically, the more data we have available, the more insight we have and can set the terms and conditions.
4. Knowing our limitations
Farmers need to have a perfect understanding of the soil they are working on. What can be grown, what cannot be grown, and at what quality and quantity in order to maximize returns. And that is key to a successful agricultural marketing, in the widest sense of the term.
When a harvest is approaching, farmers are presented with choices on what to do with their crop. Most will likely store the vast portion of it, waiting for the right time, and therefore price, to sell. But there are other ways of managing our hard-earned produce. What we do with it should be based on the carefully studied information. Gathering data on all the variables of doing business is essential. The quality of our working environment (i.e. soil), the market demands, effective marketing tools, all contribute to the quality of doing business. By following these key points, we can make the steps necessary for us to be more confident in ourselves and our enterprise.