Marketing is tough work, and many growers have looked to marketing advisory services for help. And it's paid off. A 10-year study of at least 23 marketing advisory services by the University of Illinois found that, on average, the recommendations boosted returns $8-12/acre over prices central Illinois farmers received in a 50/50 corn-soybean crop rotation.

“This is well above the subscription costs the services charge, and lots of additional dollars per acre,” says Darrel Good, a University of Illinois economist involved with the study.

That said, Good believes that taking the advice of marketing services is not necessarily a good investment for every farmer. Here's why: The percentage of marketing advisory services whose advice falls into the top third of average market prices for the year “is modest,” the study says.

The results show that the chance of advisory programs pricing corn in the top third is between 17% and 25%. By far the largest average frequency occurs in the middle third of the price range, from 58% to 63%, with the average frequency of advisory program performance falling in the bottom third of average prices ranging between 17% and 20%.

On soybeans, the services were less successful in being in the top third, at 17-19%. The bulk of their advice was in the middle third, 67-69%, with advisory service performance falling in the bottom third of the average price range varying between 12% and 16%.

“As a result, for any individual producer who already markets in the top third of the price range, or even slightly above the average price, there may not be any advantage to a marketing service,” Good says. He adds, however, that even some superior producer marketers may subscribe to services not so much for strategies to implement, but for market information they consider to be valuable.

The study shows that the average price received by farmers for corn and soybeans was in the top third 10% and 18% of the time, respectively. In other words, the track record of marketing advisory services versus farmers is better for corn than it is for soybeans.

There are dramatic differences among marketing advisory services for individual years, Good found. In 1995, for example, the range of advice strategies was between a low of $2.29/bu. for corn to as high as $3.90/bu. “Even in years with less market volatility, it's not unusual for the range of prices across advisory programs to be nearly a dollar a bushel,” the study says. The most dramatic example for soybeans is 2003, where the range in advisory prices is just under $4/bu.

On a per-bushel basis, the study shows that, on average, the advisory service strategies paid 14-16¢ more than did farmer selling strategies for corn, but just 4¢/bu. over farmer marketings for soybeans.

Put another way, the average advisory service return is about $10/acre for a 50/50 corn-soybean rotation. Even though that's small and mainly from corn, it's not trivial: $10/acre is $20,000 for a 2,000-acre farm.

The bottom line of the study, Good says, is that for producers or market advisors, “it's very, very tough to beat the market.”

Editor's Note: For more details about the study, or for a comparison of how the 23 marketing advisory services performed, go to: www.farmdoc.uiuc.edu/agmas/reports....