THE BIASES OF JIM KENDRICK (Lessons Learned)
Thirty years of teaching ag marketing and policy to undergraduate and graduate students and farmers may not have made me wise, but it has permitted me to watch a number of "sure-fire” marketing techniques come and go. I am left with these observations and biases:
· No one knows what prices will be in the future.
· Producers need to establish a long-term strategy to reduce the risk of adverse price changes.
· Producers need to focus on the entire crop year—at a minimum—not near-term price movement, which seems to be the focus of many marketing advisory services.
· Over time, fundamentals win out—prices will rise if there is less supply or more demand and vice versa. All the technical analysis in the world, phases of the moon or other such cycle theories cannot change this fundamental fact.
· Producers lose more money than they make when storing grains for a price rise after harvest.
· Taking surplus funds from the brokerage account for extravagant purposes is the single largest error made by producers as they begin to use modern risk management techniques.
· Judicious use of a carefully developed marketing strategy, over time, should result in higher prices received.
· Marketing is hard work, requiring a comprehensive knowledge of what factors affect prices on the global, national and local levels. Those looking for a "quick” answer are going to be disappointed.
· In a husband-wife management team, the wife is generally the better marketer.
- Summer 2009