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February 2010 Archive for Marketing Strategy

RSS By: Scott Stewart, AgWeb.com

Marketing Strategy

USDA Report Makes Producers Think USDArrrgggghhh!

Feb 18, 2010
The USDA yield numbers frustrated many, many producers who believe the report is out of touch. Is it? Our perspective from working with producers throughout the country is a bit different. Western Corn Belt farmers would tell you they had unbelievably big yields and that they’re not shocked by the numbers. If you’re in the Dakotas , Illinois, Wisconsin and other Midwestern spots, it’s a different story. We have customers with 300-plus acres of corn still in the field. One producer I spoke with just a few days ago said he thought the ground was frozen enough so he tried to get his corn out and instead quickly buried his combine.
 
I understand your frustration at having numbers reported that you feel don’t reflect reality and harm the price you receive for your hard work. Yes, there are bad test weights and crop corn still in the fields, and we may lose corn through spoilage and lower test weights. This will not materially change the supply and demand balance, and even if it does the USDA has a history of not recognizing these things for years afterward.
 
What can a producer do about numbers that don’t seem to make sense? Look at the big picture and not just at what’s happening out the kitchen window—focusing on only your local area can set you up for false expectations. Rather than focus on report numbers, pay attention to overall trends. Take advantage of what the market offers and the opportunities it presents—there are opportunities, especially in volatile markets.
 
Marketing isn’t simply a matter of what one sees, or expects to see, or doesn’t expect to see. Great marketing prepares you for whatever lurks over the horizon. Great marketing is being prepared for whatever the market does. It’s not about predicting the crop size or trying to outguess a USDA report. It’s about relying on strategy, not outlook.

Marketing Doesn’t Discriminate On the Basis of Size

Feb 12, 2010
To anonymous 12:23 p.m. on February 7, who suggested there’s a strategy among marketing consultants to work with only large-acreage producers: I was intrigued. At first I wondered, what constitutes a large-acreage producer? I’ve met producers who have 1,500 acres who think they’re small. Those with 25,000 acres think 5,000 acres is small. However size is defined, it doesn’t really matter in marketing.
 
Let’s look at the people behind the acres. It seems that just about every producer I meet, big or small operation, works on a family farm. If a guy’s farming 3 or 4 thousand acres, very often it’s him and his brother or son or daughters or cousins . . . it’s a family. For the most part, big acres are supporting big families. When multinational corporations start buying farms and hiring low-priced labor from overseas to farm it, we all will have something to complain about.
 
If you keep your machinery costs in line and do a good job of marketing and you have good profit margins, you can compete. Different people maintain different cost structures. There are large farms that make very little money per acre and large ones making a lot of money per acre. The same is true for small farms. When people don’t maximize their opportunities, they’ll be at a competitive disadvantage and eventually go out of business. Marketing should be the relentless pursuit of opportunities (and, of course, an ongoing effort to minimize risks).
 
All professional businesspeople have a responsibility— and opportunity—to either thrive or not. This is the same on Main Street and Madison Avenue. You have to manage your cost structure and manage your margins, regardless if you’re big or small. Some day it may come to “small” acreage producers losing their land. It’s not that way today.
 
Interestingly, I saw a news release this week from an equipment manufacturer titled “Farmers’ Top 10 Questions.” It referenced two South Dakota farmers, both Ph.D.s, who were answering what they said were the ten questions most frequently asked by growers. The third one: “Do you have to farm big to compete in the future?” And the first two words of their answer were “absolutely not.” You can read their entire comment here http://www.agrimarketing.com/show_story.php?id=58691

Why the anger over “prices, brokers and lies”?

Feb 05, 2010
Wow, Linda Smith’s Top Producer blog on Monday (2/1) really touched a nerve with some people. From the angry tone, it's clear that at least some people feel no market advisor is of any help. To generalize that all brokers are bad is like saying that all women are bad just because most of them you would not want to date or marry....or that all colors are bad just because you would not paint your house with most of them....or that all cars are bad just because you have no interest in driving most of them....or that all books are bad just because you would not want to read most of them. Most of us only need one good woman to marry, one color to paint our house, one car to drive and a few good books. Admittedly, finding a good broker or advisor is not easy nor is finding the right match in a spouse...that is why eHarmony has done so well and the divorce rate is so high.
 
Generalizing that all of something is bad, just because many or even most are bad, is using a broad brush.  You only have to find that one special advisor/firm/broker or approach, and you can have marketing magic.
 
I know that many producers are disheartened, and some even bitter, toward marketing. I can understand that. It's more than just a little challenging. However, despite the challenge, marketing can be done well. 98% of the people do not do it well. Yet it can be done well. Our clients will say so. Our Market360 consulting service has a 96.9% renewal rate. This shows that there are producers that are satisfied with their marketing consultant, and that satisfaction with advisors is not merely something I wish to believe.
 
We’ve been at this a long time—25 years.  In that time, we’ve structured a consulting service in such a way that clients get what they expect and pay for. They really value the service. Fortunately, we have found what makes a good match . . . and what fits our clients’ needs. I am proud of that. I will go to my grave knowing that we have found the way to do what is right for our clients.  That is very gratifying.
 
Some will see this blog as self-serving. Some will see a point of view that cannot be refuted: There ARE producers that are happy with their advisor.
 
If you are unhappy with brokers, consultants, marketing firms, the markets, or even farming, make a change. If you believe you’ve found the holy grail to marketing, I urge you to put time and energy toward helping other farmers succeed your way. When it comes down to it, advisors exist to help producers succeed with marketing in these volatile times. Advisors who are not doing that won’t exist for very long.
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