The difference between selling your grain for a good price and a strategic marketing plan is like having a good job that makes you a lot of money and then not maximizing your wealth through tax breaks and various kinds of investments. A Strategic Marketing Plan is knowing how to use all of the tools to maximize your profit when selling your grain.
A price really isn’t good or bad, it just kind of is. Until you start asking questions to relate it back to what it means to your farm. But first that requires asking the question What does my farm need? The most important and first step to building a strong marketing plan is understanding your organization. Yes, that means the numbers, and the other decisions and tools available to maximize your profitability.
Specifically, your cost of production by crop (COP) and return on investment (ROI) targets. How much do you have to sell for to be profitable? Have you accounted for salaries? Is your COP broken out by crop? What is a good return for your hard work?
The Planting Decision
What is the best fit for your farm? What are your crop rotation needs? What is the market saying? Where is there fit? Where is there the biggest gap between your cost of production and the price range the market is most likely going to trade in?
What works for your operation? Does the crop fit into your harvest and storage plan? When do you need cash to avoid paying interest? When do you have people available to deliver or supervise the movement of the grain? What are your storage constraints? Do you have to move grain off combine in the fall? Is it time to invest in more storage? What is the right investment for your farm? Bags/Bins?
The Risk Management
Are there hedging tools that can help you hedge your bets on the marketing decisions you’ve made? Are there ways to ensure that no matter what happens in the market you guarantee the price you’ve contracted?
When should you sell to properly balance out your taxable income? What does this mean for delivery?
Until you know the above, price is just another number. What really matters is what the price means to your farm.