Why planning for crops is similar to selling them
Mar 15, 2010
I was having lunch at a Top Producer program when a grower with a very large operation asked me a really interesting question. Why are so many producers hesitant when it comes to marketing and how come they struggle so much with marketing?
So, I asked him . . . Do you put a huge effort into planning and organizing field operations so you’re well-prepared to get the crop planted and then harvested? He said yes . . . definitely. Do you, I asked, have to make multiple layers of decisions, all related to each other . . . such as various chemicals, fertilizers, equipment, field conditions? He answered with a definitive Yes!
Lastly, I asked him whether he believed producers made isolated decisions when it came to marketing the crop they work so hard for. Are most marketing decisions made in isolation, and not part of a comprehensive, multi-layer approach? He said most are likely made in isolation. He knew he had just answered his bigger question of why farmers struggle with marketing. What he realized was this: To do a good job with marketing, you have to approach it like you approach planning your field operations.
When preparing to grow crops, you look at the big picture and make decisions in advance. You prepare for any number of potential variables—weather, equipment, inputs—that might cause you to make adjustments as you work to maximize your harvest. Same goes for marketing. You have to make a lot of decisions in advance to prepare for uncertainties.
Isolated decisions make producers hesitant and leave them dissatisfied. Let’s say a producer has 500,000 bushels and decides to sell 5,000. Having struggled to make this one decision, he feels relieved to have pulled the trigger and goes back to work. He shifts his focus away from marketing for awhile. The problem: That’s only one percent of the crop. A 1% sale will make almost no difference at all. Having made such a small sale actually hurt because it allowed the producer to think that he could shift his focus to production. However, marketing was not yet finished. The point is, you can't think of one sale or just a few of your bushels. You need to be thinking about all of your bushels, all of the time.
In the spirit of the recent Academy Awards, think of marketing like the film Avatar—view marketing as three dimensional. Marketing has depth, width and height. It’s a matrix of decisions that are all interrelated. Just like the multi-dimensional impact of fertilizer, seed, chemicals, weather, etc. in growing crops. Every marketing action produces a reaction. Strategic marketing involves layers of decisions. It’s dynamic. You’re thinking ahead to how you will execute if the market goes up a little or a lot, or down a little or a lot. You’re preparing for every possible scenario, something we do through Market Scenario Planning.
I encourage you to look at the big picture, prepare for uncertainties and make multi-layered decisions in advance. You’ll be more satisfied with your marketing.
Scott Stewart is president and CEO of Stewart-Peterson, a commodity marketing consulting firm based in West Bend, Wis. You may reach Scott at 800-334-9779, email him at email@example.com.
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