Production vs Marketing

[rook]

I was wondering if anyone has seen any data that suggests which is more important to farmers' revenue. At an agronomy-focussed meeting a few weeks ago they had a slide up that said 70% production, 10% marketing, and the last 20% was cost control if I remember right. But of course that was an agronomy meeting.

I consider myself both an average grower and average marketer. Which should I concentrate on? Or should I do a bit better at both? So far, in my farming career, if I get a canola crop in the bin I'll do all right for the year...

[freewheat]

Rook, we all need to concentrate on
controlling the weather! Marketing is
moot if it freezes or you can't seed,
etc. We can only do so much to grow a
crop, and you still need a lot of luck
to do well. Yes I said luck! lol

Now, Once the crop is grown, good
marketing is needed. Knowing costs is
paramount. Selling each bushel for a
decent amount more than what it costs
you to grow it is never going to fail
you.

Farming is so non-typical in the
business world, though. Some guys take
over set up businesses, and all they
have to do is ride the shirt tails of a
previous generations good fortune. Some
areas get 80 years of good weather, some
get 10 years of bad. (our area has had
both!) Some marry women with 80 000
dollars a year jobs, and their farm can
be no higher producing or better in the
marketing department than anyone elses,
yet they have fewer concerns over
household bills, and if all the farm has
to do is carry itself, it can look
pretty flashy, even if it makes
mistakes, or is not a high producer.

Both marketing and agronomy can be
improved upon, but I think growing the
crop is more important, and more
necessary for survival. o for a ratio,
or percentage importance, I will say:

30-80% inheritance, 30-50% wife
occupation, 30-100% weather, 5%
marketing savvy, and 5% agronomy. Ha Ha

[cottonpicken]

60%production
30%cost control
10%marketing

[LWeber]

Thats funny.

Guess the agrologists didnt like my message at their conference that we spend too much time and resources trying to eke an extra bushel of production and leave too much on the table when it comes to marketing.

I didnt break it into time management segments tho.

My message to them was if you want farmers to spend more money, make sure they have more money to spend. They didnt like it...

Cotton's example of /-$120.00 an acre is where the game is won or lost and I agree....AFTER you get it in the bin.

So in your 12 hour day, 7.2 hours are spent on production, 3.6 hours on cost control and 2.4 hours on marketing?

Does your time allocation include tractor hours?

Life changes on August 01. Astute marketers will be rewarded. You are an anomally and not the norm, Cott.
Your better half knew that already...lol

[rook]

that's surprising to me Cotton - I thought you were all about the marketing!!

On a different note - does forward pricing actually reduce risk or does it increase it? It certainly locks in a floor, but it limits upside. It also introduces the risk of buying out a contract. I've always forward priced some and have done so for next year but I am curious to see what others think...

[freewheat]

Hey rook. I too forward price, and
always do. I think the risk depends on
act of God clauses to some extent, and
of course the upside potential. It also
depends on whether you are established
enough to weather the weather. For me, I
forward price at profit, because I have
lower equity than a lot of guys who
could weather the storm better. My
banker also needs to know what the heck
I am doing, and what I am planning for.
Contracts add realism to their numbers
and expectations. The last several years
for me have been sheer pain, but several
neighbors still buy new machinery, land,
bins, etc., whether they have grown a
crop or not, which is telling.

If you are loaded, and never have, or
forget what it is like to struggle to
fund the next crop year, forward
contracts hardly matter, you can make it
regardless of what happens with prices.

Think of it this way, if you can afford
to store 10 000 bushels of canary for 14
years waiting on 40 cents, you probably
do not need to worry too much about pre-
pricing some crop. If storing a mere 100
bushels of canary for 2 years makes
things tight on your farm, you had
probably better be pricing something
ahead of time.

It is almost always the guys who have
money, I find, who state they would
never price a bushel until it is in the
bin. The rest of us who are in a
different boat, would have too much
downside risk to NOT have a third or so
of our average yield priced ahead of
time.

[cottonpicken]

My thinking is most guys would just not want to take
the necessary time to do the marketing and that they
should get outside help and then they could stay
focused at what there good at.

[farmaholic]

Freewheat, you are exactly right, what works for one farm may not necessarily work for another, no two farms are exactly alike in many ways. Everyone needs to make their decisions based on their risk tolerance and cash needs. (No wonder "one size fits all" farm programs fail to meet everyones needs, oops did I say that)

[cottonpicken]

In the fantasy farm i have built in my head i would
have 4 years worth of storage,grow eight different
crops and only ever sell 2 of those crops a year,but
those 2 would be 4 years of production,thus equalling
the 8 grown on any one year.

[cottonpicken]

And i would have a dozen young philipino women
labourers.

And my farm is in hawaii.

[cottonpicken]

And i talk and act like higgins but look like magnum
pi.

[freewheat]

lol, cotton.

[malleefarmer]

depending on your starting yield a 10 to 15% increase in price usually beats similar increased yields.

also if getting the extra yields costs extra dollars can be self defeating

[farmaholic]

The plane, the plane!!

[farmaholic]

Bottom line: if you don't have it you can't sell it!!