What is in this article?:
- New Year And A Fresh Start
- How to adapt your marketing plan
How to adapt your marketing plan
Does the current market make you want to ignore a marketing plan written months ago? Great marketing demands discipline. Don’t abandon your plan – adapt it. Here are a few suggestions on how to adapt your marketing plan.
- Break your pricing decisions into manysmaller decisions. My plan (shown here) has seven pricing increments. There is no reason that you can’t turn that into 15 separate, but smaller increments.
- Be willing to follow a trend, defer to decision dates or use options. My plan is purposely vague on pricing tools (tbd or “to be determined”). Rather than hold fast to a price objective and use a forward contract, consider a trend following tool, or deferring to the decision dates in your plan, or buying put options.
- Be patient.I get nervous when I hear of the rare producer who is taking steps to price 2013 or 2014 crop. Are you that certain of your costs for fertilizer, fuel or rent more than two years out?
- Tie your input purchase and grain pricing decisions together.The producers in the most difficult position today are not the ones who chose to start pricing 2011 corn last August, when the market was $1 lower. The most difficult position is reserved for those who priced corn early, but refused to lock down lower fuel and fertilizer costs at the same time.
The opposite problem happened in summer 2008 – too many producers chose to lock in high-priced fuel and fertilizer, but waited to lock in a selling price for grain. A bear market ensued and, ouch. Tie these decisions together and you take a big step forward by turning price risk management into margin management.