farm management field specialist
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.
The ISU Farm Management Specialists in cooperation with Farm Bureaus
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.
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 Ive ever been at!" and "Thank you! were the comments recorded with the greatest frequency.