How to Market in Tough Markets

 

Lenders always encourage producers to have a marketing plan, and most producers know they need one. But in years like this, even some of the best mapped out marketing plans have the potential for leading to a road of disappointment.

For over 30 years I think I’ve seen every conceivable plan invented by man. One of the most logical is a scale-up selling program after the market rallies above your breakeven price.

For example, if 12 months ago you calculated your breakeven at $4.20/bu. (that was logical at that time), then you start with a scale-up selling plan at $4.50 and sell more in higher increments until you get to $5.50. Works well if you have a crop.

But think how this plan has worked if a producer even did it on 50% and the producer lived in Ohio where now 50% of his normal crop may turn out to be 110% and his average price is $2 below the current market?

At the other extreme, consider the Nebraska farmer who might well have 265-bu. corn and used that same scale-up selling program on 50% of a normal crop, which might have equated to 100 bu./acre. He now has 165 bu. to sell at a much higher price.

Same plan, extremely different results. Plans are always much easier with 20/20 hindsight.

I’ve said this many times in this column and it’s something we should never forget: What worked last year has little or nothing to do with what will work this year.

While we would like to have a simple plan for scale-up selling above breakeven, years like this are a good example of why “simple” doesn’t always work well. For farmers we’ve worked with over the years we always want a plan A and a plan B. Basically, plan A is followed until circumstances become abnormal, and then you have to go to plan B. It’s rare that you can stick with plan A throughout the entire marketing year.