A $4,000 fee might seem pretty steep for a service some think they can do themselves. But Eric Jones feels his time and expertise are better spent making sure corn and soybean yields and quality goals are met.

Marketing — he leaves it up to an outside consultant.

“That's pretty good use of 50¢ an acre,” says Jones, who farms about 6,500 acres in east-central Iowa near Williamsburg and Marengo. “You have to be an expert at everything these days. With this market, you need another voice to listen to.”

The answer to whether he can afford — or afford not — to have a marketing consultant is on the not side. His profits have been steady in the volatile market. Other growers likely ask that question and have differing opinions.

Bob Wisner, Iowa State University grain marketing guru emeritus, says the benefits of a marketing consultant “depend on your farming operation, your skills and knowledge of marketing and your ability to make marketing decisions under conditions of uncertain and volatile prices.”

He says that if the corn and soybean prices you've received are consistently at or below the state average prices, “that's an indication your marketing program needs improvement.”

Melvin Brees, University of Missouri Extension economist, adds that depending on the fees charged by a consulting service, there are likely profits to be made by using an outside consultant.

“The real advantage is that it lets the consultant analyze the markets and help make decisions,” says Brees. “A consultant can make more impartial decisions. It takes the emotion out of marketing. However, it's hard for a lot of people to go that route.”

Not Jones. He farms with his brother Terry, who is also one of the owners of Russell Consulting Group, Panora, IA. Led by Corn & Soybean Digest Risk Management Editor Moe Russell, the service works with the Joneses to determine their costs to produce corn and beans, then set a per-acre profit goal.

“We look at a cost analysis,” says Jones. “We look at a $100/acre profit as a good place to start selling.”

FOR 2008, his average soybean selling price using recommendations from the consulting service was $11.44/bu., below the $16+ highs, but certainly well above the $7 lows. The average corn price was $5.14/bu.

Much corn for 2008 was sold when the market rallied in summer 2008. “About 80% of our corn was sold by June 1 at near $6,” says Jones. “Most soybeans were sold at $12.50.

“Our goal is to have all corn and most beans sold by July 1. We then come back with call options (with higher strike prices) to take advantage of weather markets.”

Making scale-up sales backed by an options or futures strategy is where the consulting service becomes a good hand. “We've used a consultant for 10 years,” says Jones. “We take advantage of it. If, for example, $9 soybeans will reach your profit goals, make some sales and don't wait for $13.”

Russell says growers often seek his company's service because they are swamped. “There are three hats producers wear,” he says. “First is plant and production manager, which most prefer. Second is financial manager and third is marketing manager.

“We have found very few growers can do all really well, so we encourage producers to ‘know what they don't know' and hire that done. Many times that is financial and marketing help, which is where we come in.”

Darrel Good, University of Illinois (U of I) Extension grain marketing specialist, says growers should match their marketing styles with the consulting service best for them.

“One of the first things to do in selecting a consulting service is to take careful consideration of what I call the ‘marketing approach' of the consultant,” says Good. “Is it consistent with the way the individual likes to market? If someone is in and out of the market and recommends a lot of hedging and you're a producer who doesn't want to do that, it won't be a very good match.”

Brees says the size of a farm often determines whether scale-up sales or futures or options can be part of a marketing program. “A grower farming 1,000 or fewer acres may not have enough soybeans in the rotation to cover too many 5,000-bu. futures contracts,” he says. “A service that uses a lot of hedging may not be right for them.”

Good and his colleagues in the U of I farmdoc program surveyed the performance of agricultural marketing services from 1999 through 2005 (see Corn & Soybean Digest's Late November 2008 issue, Assessing AgMAS, or http://tinyurl.com/AgMASCSD). The cost for a marketing consulting service ran from $100 to several thousand, depending on the services provided.

Good says a service that offers generic marketing recommendations through a newsletter may charge only a few hundred dollars. “If you want more individualized consulting, then fees will be a lot higher,” he says.

WHEN WORKING WITH a consulting service, several things should be considered. Along with the service's marketing approach, Good says to develop a budget of expected inputs and other costs. Timing of cash-flow needs should be established, as well as the cost and availability of storage.

Russell follows similar guidelines with his grower clients. “First we determine the gross dollars per acre the producer needs to make all term debt payments, pay all operating expenses, pay living draw out of the operation, pay depreciation and lastly have a desired level of profit ($100/acre in the Corn Belt),” he says.

“This total gross dollar per acre becomes the producer's marketing goal that we work with him to reach throughout the year,” Russell says.

Brees says growers benefit strongly by working with a consultant to generate a plan. “You can determine what it will cost to produce the crops, what it will take to generate a profit, then what opportunities are there to reach that profit level,” he says. “You try to develop a plan to capture those prices.”

Russell says understanding a consulting service's track record is important, “but trust is also a key factor and working with someone who is accessible 24/7 to answer questions. Also we feel a marketing consultant should not be the producer's commodity broker. Those two functions should be separated for control purposes.”

ACCORDING TO BREES, “It's human nature to not like it if you don't reach the high of the market. But no one gets the high (unless they're lucky). The goal is to be in the top one-third of the market. Even that is difficult to achieve in this volatile market.

“My big concern with producers is that they understand the marketing adviser is not going to know if $16 is the high for soybeans. No one knows that,” he says.

Growers may need to alter the marketing plan. “You may need to revise the plan on the service's recommendation if there are big changes in the market,” says Brees. “If prices are charging higher, you might raise some of your previously set goals. If the market is disappointing, you may want to get more aggressive with some sales. A good consulting service can help you make those determinations.”