Thirteen habits and behaviors your competitors practice.
Oct 25, 2010
To put this blog in perspective, please allow me to recount a conversation I had with an Iowa producer. His words to me were: "I consider every farmer in the world a competitor. I will not help anyone make more money or be more successful." His reasoning was that he'd seen producers from South America come and buy land in his local area that he bid on. He viewed farmers everywhere, whether they be 10,000 miles away, three counties or three miles away, as competitive threats.
You may not consciously think of the farmers in your local area as competitors. Yet, when they want more land to plant crops, they sometimes look at the land you farm.
Do you ever wonder how other people—whether down the road or even in a neighboring county—possess the wherewithal to buy more acres or pay a higher rent or purchase new equipment?
Yes, there are people who pay a lot for farm land (either rent or purchase) that are overly aggressive and may, down the road, go out of business. There are others who can afford to pay a lot for land because they inherited a lot of land and have no debt. And then there are those who just are consistently able to pay more for rent or land because they are very profitable and have deep pockets.
I’d like to share with you 13 marketing habits of the successful grain producer, which I've witnessed over my 30 years in commodity marketing. These are behaviors that, I believe, position him to succeed in good times and bad.
- He knows Las Vegas is in Nevada and his farm isn’t, so he doesn’t “make bets.” Rather, he strategically positions himself to capture opportunity and protect against risk.
- He has his banker on speed dial for all the right reasons. He knows that an open, honest relationship, and being proactive and knowledgeable on the financials, is helpful to his pursuit of success.
- He looks at the big picture and doesn’t sweat the small stuff or dwell on the past. One poor sale or hedge doesn’t get him down; he’s looking at the weighted average of his entire crop.
- He knows that profit is profit, and he’s not afraid to lock it in. That’s because he understands the alternative is usually analysis paralysis.
- If you read this blog regularly, you’ve seen this one a few times: He knows how to use all the marketing tools available, even though he may not use all of them during a given pricing period.
- He’s not afraid to make mistakes because he knows there are marketing tools that can help him recover from mistakes and maintain flexibility as market trends turn.
- He remains consistent in his approach to marketing because he’s confident in it. He knows that if he jumps ship in bad times, he will more than likely jump at the wrong time.
- He doesn’t always follow the crowd. Sometimes when people are all on one side of the boat, it flips over.
- He never forgets that anything is possible. Just like you, he knows the Titanic went down and the Wright Brothers went up. He also believes that, when least expected, the price he gets for his production could go down or up.
- He’s wary of the news and pundits, knowing there is always a fundamental out there painting the wrong picture.
- He doesn’t get caught up in the here and now of his trades. If he decided for good reasons two months ago to sell corn at $5.25, he doesn’t change his mind when corn reaches $5.25 just because the guys on TV are bullish. In short, he maintains discipline.
- He recognizes that marketing is a combination of doing what the market tells you to do and what you need to do for your operation. The trading market offers signals to buy, sell, or hold. Those are important. At the same time, he keeps those signals within the context of what his operation can handle. If the market says sell, and he already has plenty of corn sold, he probably will look at other alternatives, including doing nothing.
- If he makes a mistake, he works hard to move beyond it rather than dwell on it or gamble and try to make it up. That’s because experience tells him his mistakes almost always create other opportunities.
One more secret: I encourage you to note which habits above, if any, that you don’t already follow. For starters, focus on changing just one or two of them. You’ll begin to position yourself to become 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 firstname.lastname@example.org.
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