Tom Olsen,
farm management field specialist
Situation
Marketing commodity crops is one of the most difficult tasks for producers. Decisions as to appropriate timing and price have great affects on the overall profitability of any operation. Success is hard to measure. There is a tendency to let emotion drive many choices. Marketing plans tend to be informal and without price or timing targets. There is not a great amount of confidence in the marketing plans in use and little continuity from year to year.
Response
The ISU Farm Management Specialists in cooperation with Farm Bureau’s
education department conducted “Winning the Game” Marketing Workshops
throughout the state in the winter of 2004. Pre-harvest cash grain marketing
strategies were the main features of these workshops. Local lenders and grain
elevators assisted with financial support for these meetings.
The main elements of these meetings were threefold. First, a lengthy examination
of crop revenue insurance was presented. This is to encourage confidence in
pre-harvest marketing even in the face of a low-yield, high-priced crop year.
Second, the key elements of any marketing plan were laid out. These include
pricing targets, decision dates, “trump cards” (i.e. the use of technical
tools for decision points), and baseline prices (performance measures against
other plans). These key elements are used to take advantage of long-term seasonal
price trends and disciplined decisions. Finally, an interactive market simulation
program was used to test a sample marketing plan. One of several actual past
corn market years was used.
After playing a “sample” year as a group, each producer was to build
their own pre-harvest market plan using the key elements and tools discussed.
Aggressiveness was encouraged since these were just workshop plans. Another
past market year was selected and the “game” began. As the “market” progressed through the year, the program would stop at each decision date, price
level, or technical indicator as directed by the entire group. A score sheet
for bushels sold and price level was kept by each producer for their plan. At
the end of the game, the average sale price was determined for each producer.
The meetings closed with a follow-up discussion.
Impact
In this area, six workshops were held with an average of 30 in attendance. Of the 152 respondents to a survey, 89 percent felt the workshop was valuable or very valuable. 57 percent had not developed a marketing plan in the past and 84 percent have not implemented an entire plan. As a result of the “Winning the Game” workshop, 94 percent intend to develop a 2004 crop-marketing plan with 74 percent intending to implement their entire plan. In the past, 74 percent surveyed have pre-harvest marketed grain and as a result of this workshop 91 percent intend to do so in 2004. “Excellent!" "The best I’ve ever been at!" and "Thank you!” were the comments recorded with the greatest frequency.
