Marketing takes a lot of time and hard work. Like any other aspect of life, the rewards will then follow.
After the last couple years of many producers doing a poor job of marketing, I'm getting tired, as probably many of you are, of everyone telling us how important marketing is.
Many theories are floating around the countryside about how to improve this problem, ranging from camouflaging marketing into insurance programs, to setting up marketing clubs, to putting on marketing schools to teach how to use futures and options, etc.
I've watched this process for 25 years and my guess is that marketing results among most producers have actually gotten worse, not better. That's why I've long been a strong believer of the “kiss” principle — keep it simple, stupid.
I'm pleased to say that I think many of the subscribers to The Brock Report and clients of our firm in the last four or five years have done very well in the markets.
What's worked and why have they done well? Here are some guidelines that I think will be of help to you:
Know your cost of production.
Have a solid fundamental price forecast.
Understand and pay attention to a valid technical system. Don't fight the trend.
Have a clear understanding of goals and objectives — among everyone who can second-guess your decisions.
Be willing to use various marketing tools. This means being willing and able to use futures and options.
Leave your ego somewhere else. Admit you're going to make mistakes. Plan on making many small mistakes, and once you make a mistake, don't dwell on it — move on.
Know when to forget last year's crop.
Recognize that marketing is an art, not a science. It takes a special talent to be good at this, and you must enjoy it. If none of these characteristics fit you, admit it and hire someone to do your marketing for you.
Some of these you may not agree with, but I do believe they're all correct. On point No. 3, it's important to understand technical analysis. Also, the old saying that “the trend is your friend” is extremely true.
One of the keys to our success has always been to stay with the trend of the market, regardless of where we thought the market was headed from a fundamental point of view.
Over the years I've also had some difficulty with point No. 5 — using the various marketing tools. Most farmers don't have the emotional ability to handle the swings in futures and options. Yet, as I look back, our biggest successes have been where we've used futures and options six to 12 months in advance of harvest to capture big price moves to the downside.
Parting thoughts: Marketing can and should be one of the most important and fun aspects of running your farm business. Like anything else in life, however, understanding and having fun at it means having a thorough understanding of the process. It also means a lot of time and hard work. The sooner you start learning the process, the sooner you'll be able to reap the benefits of your hard work.
Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit www.brockreport.com.