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Marketing Strategy

RSS By: Scott Stewart, AgWeb.com

Marketing Strategy

Earn the Confidence of Lenders

Sep 16, 2009
If you are like most producers, the relationship you have with your lender is very important. There certainly are a few producers in a strong cash position who never have to darken the doors of a bank. For many producers, though, bank financing is an integral part of the operation.
If you have not already talked to a banker about financing for hedging, options purchases, or for hiring a marketing consultant, be forewarned. Some bankers are not going to be too keen on the idea. And you know what? You can’t blame them.
Your banker's experience has likely shown that people who trade futures and options lose money. Their producer customers don’t have a structured, disciplined strategy, they don’t implement a consistent approach to marketing, and too many end up speculating. Or should we call it “hedgulating?” Seeing this happen gives bankers reason to be leery.
When you talk to your lender about your marketing (or your spouse or whoever else may be judging you), think about this: The better prepared you are, and the more comprehensive your approach, the greater your chances of success will be. 
Here are some suggestions to help you earn the confidence of your lender:
1.       Set goals for your marketing. For example, help your lender understand that you are trying to accomplish a high average return per bushel over time for the sale of your crop. This will help ease your lender's concerns.

 
2.       Choose a reputable advisor or consulting team in which you and your lender can have confidence. 

 
3.       The advisor you choose needs to take the time to understand your needs and tailor the marketing approach to your operation.

 
4.       Be sure that advisor takes a strategic approach, laying out strategies that manage market opportunities and risks in both up and down markets. Avoid outlook-based marketing. (See my earlier posts on the difference between a strategic and an outlook-based approach.)

 
5.       Once your marketing strategies are laid out in a structured way, have the discipline to follow that structure. Do as you plan to do. That will build confidence and respect with your lender.

 
6.       Be sure to have a budget for your marketing. (See my last post on this topic.) Doing so will ensure that you are making good business decisions, not emotional ones based on cash flow.
 
Marketing can be done well. Your lender can play an active part in the process. It may not be easy at first. With a comprehensive structure in place, however, you can expect to feel more in control and confident in your marketing.
Scott Stewart is president and CEO of Stewart-Peterson, a commodity marketing education and advisory firm based in West Bend, Wis. You may reach Scott at 800-334-9779, email him at scotts@stewart-peterson.com, or visit www.stewart-peterson.com .
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COMMENTS (8 Comments)

Anonymous
hey 2:58 I think your pretty smart but, let me guess grandpa handed to dad and dad handed to you so now your the big wheel just like 9:11 said and if you own your land and have that much income why are playing honeysuckle with the banker.
9:56 AM Sep 18th
 
Anonymous
Own all my land and averaged $4.78/ bushel on 100% of my production. So, I wouldn't make those kind of assumptions. I made a business decision like I have been doing for years. I didn't sell because I knew where the market was headed, I sold because I knew I could make good money. Pigs get fed and hogs get slaughtered...I guess I know which one you are. Stop blaming everyone else, I see enough of that in the White House
1:58 AM Sep 18th
 
 
 
 
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