In August, we broke down all of the jobs that a farmer must juggle to run a successful operation.
You’re an accountant, an economist, a meteorologist, a credit analyst, a quality control expert, a negotiator, a salesman, a logistics expert, a veterinarian, and an agronomist.
At this rate, they might as well call you a magician as well for pulling it all together.
But the single most important function is the ability to sell your grain to get to do it all over again the next year.
One big swing in prices per bushel could be the difference between a successful year and teetering with break-even numbers (or worse). We see a lot of producers outsource their grain marketing capacity as a way to mitigate risk and capture upside.
But cut through all the fancy websites and biographies of the person swearing up and down that he’ll put your farm first, and it’s hard to tell one grain marketing operation from the other.
That’s why we wanted to take some time this week to discuss the five most important things that you should consider when hiring a grain marketing consultant to help you promote your grains.
Know these five things before you start paying a few bucks an acre or tens of thousands of dollars to market your grain.
Consistency and Performance
Consultants with solid experience, strong track records, and a rich history of performance are the difference makers in today’s crowded industry. A good grain marketer can analyze the cost of your crop inputs and determine a specific break-even price for your crops.
Using this break even metric, you can begin to devise a strategy that helps you hedge against losses and capture the greatest possible upside.
Many successful grain marketers will keep track of their recommendations in their communications with clients. Further, comparing and contrasting calls against other market players is a healthy way to benchmark success.
Ask for time stamped recommendations and sales records. You can look at historical prices to determine how these marketers performed during the calendar year. Also, you can spot a track record of performance and gauge whether they provided the type of insight that would bring your operations a profit.
Ultimately, every grain marketing consultant likes to talk about their big successes. But one of the variables that affects consistent success is humility.
Perhaps one question to ask your consultant is “what were your worst two recommendations?”
Sets Realistic Expectations
We live in a world of guarantees. But sometimes a guarantee isn’t worth any more than the price of the paper. In fact, some are just empty promises on a screen.
If someone is guaranteeing that you’re going to see prices that are the top 5 to 10% in your state, take a step back from the conversation. You need to be realistic about the results that will be delivered by any advisors. It’s wishful thinking to expect that you’ll be able to get the best price every single year in your local markets.
That is why most reliable grain marketers set reasonable goals: They will aim for above-average prices in a specific range, or they will pinpoint prices that will ensure that your farm is running a profit for the year.
Offers Grain Marketing on Your Schedule
Farmers don’t live the 9 to 5 schedule that we see in cities across North America. It’s hard work, and early mornings in the field and late nights in the office are part of the job. That’s why you need to be able to market grain on your schedule, not someone else’s schedule.
Many companies can provide the flexibility, but it’s always important to remember that a grain marketer works for you, not the other way around.
When assessing grain marketers, send them emails on your schedule to determine how and when they respond to your requests. Check their social media channels to get a sense of when they are assessing market conditions.
Can Separate the Wheat from the Chaff
It’s not enough just to know the prices of crops at local elevators or the names of the buyers.
Today’s most successful grain marketing operations have a full grasp of the variability that we’ve seen from farm to farm, especially in the summer of 2017.
Good marketers will help identify specific needs of potential buyers. For example, a wheat buyer in one region may require higher protein content (14%), while another buyer is simply seeking 12%. They can explicitly discuss key variables of your grain and know it inside and out.
A successful grain marketing campaign goes above and beyond to display the fundamental differences between your crop and the supplies available in both your local area and on the national level. A reliable grain marketing consultant should also have the capacity to look into moving your grain beyond the traditional network in your state or province and open new doors that you never expected.
Thinks Every Step of the Way with Risk in Mind
Emphasis on risk management is a critical component of grain marketing. It’s just as important to reflect on how much you can get for your grain as it is to consider how much you could lose if the markets go sideways.
You must understand that a grain marketing consultant isn’t just helping you, but a bunch of clients. Essentially, they are like a hedge fund manager, taking care of the assets of their clients. In your situation, it’s grain. But that grain is worth something. When it’s converted from something on the books to actual cash is a different story.
An excellent grain marketing consultant will factor in all the risk variables, including your farm’s cash flow needs. They will understand when there’s more opportunity in the market and to stay patient. And they’ll remove emotion from the equation, something that is difficult for the individual farmer to do.
Who Is the Best Grain Marketer?
So, who is the top grain marketer for your crops?
We argue that it’s the person who knows your crops, challenges, and balance sheet better than anyone…
We think that there’s something warranted in outsourcing a job to something that you admit you could be better at though!
Selling grain can take up a lot of time, energy, and even money (especially if you are paying a few bucks an acre!)
Having a neutral outsider is certainly warranted – they can be backboard for you to shoot ideas against in times of uncertainty.
However, when it comes to executing on a target price, this requires a whole new effort.
That’s where FarmLead becomes your best partner. In just minutes a day, you can set your price, negotiate with buyers around the country, and do it all on your schedule. With FarmLead, when you post your grain for sale, you’re immediately shopping it to all the possible buyers.
Overall, there’s nothing wrong with asking for help. It’s certainly worth knowing what sort of your capacity your grain marketing partner has though.