By Steven Schalla, Stewart-Peterson
Many in the dairy industry are nervous about the milk market. Considering the financial situation of many farms today, you can’t blame them.
What’s more concerning to me is that many folks seem to be not only nervous about what the market will do, but about what they will do about the market. In other words, producers are uncomfortable about getting more active in their own marketing efforts.
Marketing can be uncomfortable for many reasons, but we’ve found that marketing success depends on removing a couple of key constraints.
I use the word “constraints” purposefully. The theory has roots in crop production with a principle called “Liebig’s Law”: Growth is controlled not by the total resources available but by the scarcest resource – the limiting factor. A simple example for crops could be rain. Rain shuts off, not much else matters. This is where the phrase “you’re only as strong as your weakest link” comes from.
The same is true for your marketing. Unless you understand your weaknesses, you can’t apply the right solution to improve your marketing. For example, you can spend all the time in the world marketing, but without knowledge or discipline, that time is not well-spent. Or, you can have all the knowledge in the world, but without proper time devoted to developing strategies, you will not be successful.
Here are the three most common constraints that rise to the surface when we walk producers through our Marketing Assessment Profile process:
1. Time – For many producers, the daily list of tasks, projects and problems is already plenty to handle. In addition, you need to allow time to check the milk and feed markets daily. Many folks struggle to consistently commit the time to develop marketing strategies and thus end up “shooting from the hip” with their decisions. Marketing requires time to learn and to develop the strategies necessary for your farm to be in the best possible position, whether the market goes up or down.
2. Knowledge – This is a common constraint, since the milk market is still relatively new. To start, learn as much as you can about all of the various marketing methods and tools so that you know what to apply, when and where. Then focus your efforts on learning more about how to make good decisions in a strategic, structured way.
3. Discipline – The uncertainty of the markets and emotions associated with making milk pricing decisions can be paralyzing. Our experience shows over and over that developing a structured, strategic approach to marketing will decrease stress and increase your success. To help clients improve their discipline, we use Market Scenario Planning, which analyzes all possible market outcomes and prepares strategies for each potential scenario. What will you do if prices rally a little or a lot? What will you do if prices decline a little or a lot? When you are prepared, uncertainty is replaced with concrete action plans.
Take stock of your own strengths and constraints. Remember, we are only as strong as our weakest link. Take an honest look at your constraints and consider the areas where you have both an interest and an aptitude to improve on your own. Look also at the areas where you might be better served to hire professional marketing help.
The key will be finding the right approach that maximizes your marketing efforts. When you do, marketing will become more and more comfortable, and nervousness will be replaced with confidence.
Steven Schalla is a Market Advisor for Stewart-Peterson, Inc. He can be reached at (800) 334.9779 or firstname.lastname@example.org.
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