5 Steps to Managing Risk in your Grain Marketing Plan

The pressure to build a solid grain marketing plan has grown even more pressing as yields increase and prices drop. Most farmers know that good prices don’t last forever, yet few take action to shift risk or lock in gains before planting.

Every farm operation requires a risk management strategy as part of their grain marketing program.  In many operations there remains little room for error, leaving farmers scrambling to find ways to spend money to gain a marketing edge.

The following 5 tips will help to build a grain marketing plan that considers risk and needs throughout the year.

  1. Finish what you started. Once you’ve built a comprehensive marketing plan, put it in motion and stick with it. Make marketing a priority; plan when you’ll execute and be diligent about following through.
  2. Keep an eye on input purchase costs. Crop input prices are prone to squeeze farm profits. Understanding your imminent input needs and estimating future needs will help you to understand your cash flow situation. Building this understanding into your grain marketing plans will ensure you’re moving grain before cash flow gets tight. You’ll avoid scrambling and knee-jerk marketing decisions.
  3. Focus on production, not market direction. Developing a comprehensive marketing plan prepares you for market moves – no matter what direction it’s going. Focus on the quality of production and sticking to your marketing plan; don’t get caught up in the watching the market and asking ‘what if I sell and prices go higher?’
  4. Find balance in your grain marketing plan. The first step to developing a strategy is to consider how to best balance your operation to respond in a timely fashion if markets move quickly. Low market prices have many producers rethinking their approach to growing, storing and waiting to see what happens.
  5. Find a trusted source to support the development of your grain marketing plan. Balance is best found through collaboration and feedback.  Find a trusted source to provide advice on your proposed portfolio and marketing strategies. Remember to discuss your risk tolerance, goals and abilities.
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