During volatile times, it's important to take advantage of every profit opportunity presented. Here are a few tips that will help ensure you make the most money for your crop.
1) Review your plan.
Most farmers create their marketing and business plans for the season early on, but then don't update it during the season. Review it daily to confirm your goals are met. "The plan you set out with in the beginning might not be exactly what happens," says Chris Barron, author of the AgWeb.com blog "Ask a Margins Expert
Barron says a plan should:
- Identify what you currently know. How much of your grain is currently sold? What storage do you have left on the farm?
- Estimate your total crop production. Run several scenarios and scout throughout the season.
- Continue to improve your estimate as the crop matures.
- Set realistic profit margin goals. How much is your cost of production? What is your yield potential and realistic price target? Sell what you don’t have storage for and be disciplined, not greedy.
2) Watch the markets.
Barron says that producers must keep an eye on the markets at all times
. "Pricing opportunities often come when we are distracted with other tasks, like planting, spraying and managing the crops," he says. "Sometimes these pricing opportunities can come and go in the blink of an eye.
If you're not able to constantly watch the markets, it's critical to have someone watching them for you."
3) Remain flexible.
If a pricing opportunity came up, would you be able to take advantage of it? Barron says it is important in today’s market to remain as flexible as possible
. You need to know how much grain you’d sell if you were given the opportunity and stay flexible in terms of crop mix.
This spring, flexibility was extremely important. "I'm a huge fan of having written plans, although I recognize that plans can change in the middle of any process," Barron says. "Planting season should be no different." Barron encourages farmers to be willing to change their plans if it will increase profits, whether that means planting a different crop, selling grain sooner than intended or using new marketing tools.
Watch the video below to learn more from Chris Barron about growing your margins.
For More Information
Read more of Barron's thoughts in his Ask a Margins Expert blog.