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Marketing is key to making a profit

Photo courtesy of the American Bankers Association

The down farm economy is taking its toll on farmers and ranchers across the country. An agricultural banker and market strategist offer farmers advice on how to obtain the most bang for their buck.

Farm prices has been a hot topic at the National Agricultural Bankers Conference, hosted by the American Bankers Association, in Omaha, Nebraska. Shan Hanes, chairman of the American Bankers Association Rural Bankers Committee, says profit and marketing go hand-in-hand.

“We push marketing pre-harvest,” Hanes, an Ag banker in Kansas said. “Historically, that will get you the best price over the largest number of years, with sometimes a 50 to 60 cent increase in selling price. To market pre-harvest and come up with a marketing plan have been a big deal. Good marketers seem to breakeven or make money consistently. That’s kind of our thing: ‘You’re never going to go broke taking a profit.’”

Another Ag professional expresses similar views. Brian Grossman, market strategist for Zaner Group, says there is a seasonal tendency for market highs to be posted earlier in the year.

“People that are catching the top of the market, or top 25-percent, are the ones who are making those early sales, in advance. For a lot of people, it’s daunting to make a large sale on the cash market. That’s why a lot of people come to the Board and work with people like myself. We can be putting in some kind of risk mitigation strategy,” Grossman said.

Grossman encourages producers to work on their marketing plan alongside their operating plan.

“I personally feel that one cannot be complete on marketing or complete on budgeting if both of them aren’t complete. They really need to go hand-in-hand,” Grossman said. “The sooner you do it, the earlier you’re going to be aware of what kind of prices you need to have. Earlier is always better.”

Hanes describes “good marketers” as realistic and forward-thinkers. He shares how producers are overcoming today’s low market prices.

“To me, it look likes we’re back to those mid 90s, where the price didn’t get above a producer’s breakeven for two or three years,” Hanes said. “However, guys were able to produce and sell above their breakeven by being creative in marketing, being astute, taking advantage when they could and then reowning. By adding 15 to 20 cents each time, they were able to sell above breakeven.”