Apr 20, 2014
Home| Tools| Events| Blogs| Discussions Sign UpLogin


July 2010 Archive for Marketing Strategy

RSS By: Scott Stewart, AgWeb.com

Marketing Strategy

Write Your Own Financial Reform

Jul 19, 2010
It was a lengthy battle. In the end, the Senate passed the 2,300-plus-page financial reform bill, which means very little to you as a producer marketing a crop. Here’s what all the fuss does say: Arguing and scheming and passing bills changes nothing about the complexity of markets and the way you sell your production. There are several forces at work moving the markets. You can’t control them, but you can take control of your marketing.
This bill isn’t going to change farm marketing, despite last week’s implications in the Wall Street Journal article “Finance Overhaul Casts Long Shadow on the Plains.” You’ve still got to prepare for the countless variables that can move the price you receive for your production. Among them: currency fluctuations, growing conditions, drought, USDA reports, speculation, decisions made by the Chinese government and rogue traders. The list goes on from there.
Yet, despite what is an unpredictable and uncontrollable market, marketing can be done well. Through marketing, you can position yourself to take advantage of opportunities and minimize risks. In reality, you have to.
I don’t say this because I work in farm marketing. I say it because I work for independent farmers.
Prices offered by the market over the years tend to average near the average producer’s breakeven. That’s just the way it is. That’s why it’s so important to consistently take out of the market as much return as you possibly can within a reasonable risk parameter.
Write your own financial reform. That is, learn the tools that will help you position yourself to succeed.
Some will say that marketing tools are too complicated. As an example, when we talk to producers about hedging and strategies that employ futures and options, one of the more common responses we hear is: “Why sell a cash crop and spend money on calls? It doesn’t make any sense.” The answer is that doing so replaces the direct risk of ownership with a more conservative re-ownership approach.
There’s a bigger-picture answer as well. It has to do with the concept of understanding tools and using them appropriately. Whether you sell a cash crop and buy calls depends on your personal strategy. The strategies you employ should be tailored to your operation, your risk tolerance and the hopes you have for your operation. Today, I really just want to stress that marketing tools are used to position you to capture opportunities and minimize risks. They should be embraced when appropriate.
Chances are you were frustrated with marketing before this billed passed the Senate. We’ve read the frustration in a Top Producer poll suggesting that a significant number of producers market by gut instinct. If you find yourself getting irrationally exuberant during a rally, stubbornly adamant during a decline, or second-guessing your moves, that’s your gut guiding you. And, if that’s the case, you’ll be frustrated well after the bill’s provisions take effect.
Save your gut for Vegas and join the minority of producers who take control of their marketing by learning marketing tools. Develop sound strategies and follow them, and you can dramatically decrease your frustration as you increase your comfort level. You can replace fear and anger with confidence. In the end, you’ll make your marketing boring, cold and calculating. Not frustrating.
Try not to get emotionally caught up in the editorializing that comes from both sides of argument over reform. For producers, the bill passed by the Senate last week is just a lot of noise that leads to misplaced energy. The price you receive or don’t receive for your hard work will be determined far more by your actions than by those of the Senate.
 
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 scotts@stewart-peterson.com.
 
The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report.  Futures trading involves risk of loss and should be carefully considered before investing.  Past performance may not be indicative of future results. Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2010 Stewart-Peterson Inc. All rights reserved.

The X's and O's of Marketing

Jul 06, 2010
A producer with whom we work reminded me of the “Hail Mary” pass play in football when he said that what he likes about his marketing is the way we “chip away, chip away, chip away, not trying to achieve everything at once.” It’s too bad the NFL season isn’t with us all year. If for no other reason, football is such a great analogy for how you should approach your marketing.
 
Despite having a reputation as one of the most violent popular sports in America, football has far more to do with calculated strategies than with the jarring collisions that make up highlight reels. Coaches and players prepare for games by watching less-than-exciting hours of game film, looking for all the possible actions an opponent might take, and preparing for them. Plays are drawn up for every possible scenario. And, while teams include the heart-stopping Hail Mary in their preparation, no team wants to be in the position of having to call it. They’d much rather move methodically down the field – chipping away to achieve success.
 
In marketing, the Hail Mary is a gamble with dire consequences. The same client who told me he likes to methodically chip away also recalled the time he was doing his own marketing and “went for it all.” He referred to it as his personal horror story. This is not to say a person won’t connect once in a while. That’s what luck is.
 
Your goal in marketing should be to achieve the highest possible average price over time. This doesn’t come by throwing caution to the wind. You get there with prior planning, discipline and consistency. When you’re thoroughly prepared for whatever the market may do, you’re in a better position to recognize profit opportunities and pull the trigger to make a sale when the time is right. It’s a far better approach than hoping to win back your margins on one play.
 
In the commodity business, prices offered by the market over the years tend to average near the average producer’s breakeven. If you prepare to methodically capture as much opportunity as you possibly can—within a reasonable risk parameter—you’ll do better than average, ensuring your success long-term.
 
It’s been written that Vince Lombardi, the legendary former coach of the Green Bay Packers, after whom the Super Bowl trophy is named, learned the importance of preparation by studying game film. As I’ve written before, you’re no stranger to preparation when it comes to planting and harvesting a crop. Apply the same focus on planning to your marketing, and you won’t ever feel the need to make a desperation play.
 
By the way, for the football fanatics interested in a little trivia, former NFL quarterback Roger Staubach coined the Hail Mary pass when he made a desperation throw and completion to win a 1975 NFL playoff game. As the story goes, reporters after the game asked him what he was thinking when he threw the ball up for grabs. “I closed my eyes and said a Hail Mary.” Good thing Mr. Staubach wasn’t a marketer.
 
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 scotts@stewart-peterson.com.
 
 
The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report.  Futures trading involves risk of loss and should be carefully considered before investing.  Past performance may not be indicative of future results. Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2010 Stewart-Peterson Inc. All rights reserved.

Happy Independent Farmer Day

Jul 02, 2010
Thomas Jefferson was the third President of the United States. He was a signer of the Declaration of Independence. Among his many other talents, he was also a farmer. I thought it fitting as we come up on this Independence Day weekend to recognize independent farmers in America today, as Jefferson so vigorously did more than 200 years ago.
Independent farmers are integral to our rural communities. When farmers purchase inputs locally, local communities gain the revenue. When they buy tractors and combines locally, the dealership benefits. When money passes hands within a community, some of the hardest-working people in America stay in businesses, and rural communities remain an integral part of our future.
At Stewart-Peterson, we wish you a happy holiday weekend and profitable year.
 
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 scotts@stewart-peterson.com.
 
 
The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report.  Futures trading involves risk of loss and should be carefully considered before investing.  Past performance may not be indicative of future results. Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2010 Stewart-Peterson Inc. All rights reserved.
Log In or Sign Up to comment

COMMENTS

 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions