Grain Marketing Consultant

[Digger]

I would like some input from producers of ag commodities as to if you would consider a grain marketing consultant for your business. If so what would you expect from this consultant and what would you be willing to pay?

My philosophy is that producers of ag commodities are in the business of selling crops, not growing them. With that being said consider all the time, attention to detail and money that goes into growing the crop vs how much of the same is afforded the selling/marketing of that same crop. I mean the whole industry (line companies, end-users etc. etc.) not just producers.

Your thoughts and honest opinions would be appreciated.

[TOM4CWB]

Digger;

Being a seed grower, I always am trying to plan what the market might be doing, 3 years into the future.

Spreading production risk to cover off marketing risk is also wise. What I am saying is we try not to put all our eggs in one basket!

Marketing consultants need to have a share in my business... a share of my costs... and not just take my profits.

There are good people around... but I find it difficult to pay someone else to do what I should be doing (marketing) if I am to be forward thinking in marketing...

A few bad decisions can really cost big time... and in the end, the consultant is going to tell you these are your decisions anyway... only you can make them.

Providing useful information can be of real value... do you need a team member to help collect and filter this info for you?

If you are short on time, and don 't enjoy researching info, know someone you can trust to do this for you... then this team member can help!

Don't expect marketing miracles... because prices are driven by chaotic events... most times they cannot be predicted!

[rain]

Digger Tom is right. first you have to know what it is you want. Is the consultant going to do it all or is he going to help in the decision process. The right person can help out a lot, help take the edge off the decision process. Be sure to interview at least two different consultants about the job you want filled though.

[ianben]

Here in UK we are looking at joining grain marketing coop.

They claim to be able to get premium for organised marketing and providing what customer wants when he wants it.

Sound familiar? but it is volerntary. In fact it is by invitation only but that may just be flatery. Claim they only want the better growers who can produce what is required.

Advice on what to grow and what they can sell. Commit tonnage before harvest and choice of pools, harvest sept/dec jan/april may/july or whole season. Full payment 7th month after pool closes ie 7 feb for dec.
Advances available at low interest

Cost approx £2/tonne can$5/tonne all grains traded canola costs more/tonne £2.50

They like total commitment but are allowing a try us and we will prove it.

Thinking of try half our crop and seeing if there claims are true.

[Digger]

I guess what I am looking at is similar in principle to a co-op for some aspects. i.e. selling/buying power through volume.

Also someone who can remove the emotional aspect of grain marketing and provide grain marketing and risk management strategies.

[TOM4CWB]

Digger;

The "emotional aspect of grain marketing" is part of the market.

If we are purely going on economics, then supply, demand, profit and loss on your specific farm... are what need to drive your marketing decisions.

I have said many times, my farm will do well if a little profit can be made on each sale we make.

The trick is knowing WHEN a profit exists, and what risk is involved in making the sale!

Have fun, marketing is certainly an interesting job, you will certainly meet interesting people if you do a good job on searching out a good marketing consultant!

[rain]

Digger where are the consultants your considering based out of?

[Digger]

Rain

This is a project I am considering implementing myself. I have been employed in the grain industry for the past 10 years and I have been developing and researching a business plan for this for the last year and a half.

[TOM4CWB]

Digger;

Good Luck, you are going to need it.

Many good people have tried and lost their shirts trying to help farmers market their grain.

Somehow there is a logic, that marketing info costs next to nothing, everyone should trust a few "experts" in the government who know more than the futures market, and that farmers are too stupid to know, care about marketing, or know how to develop markets themselves.

This has been beaten into our heads for over 50 years... it could well take generations to create a trust between most farmers, and the majority of marketers in western Canada again.

If you want to starve your family, work real hard, and give only good market advice... give it a shot!

[charliep]

I felt that one Tom4cwb.

A weekend of watching curling so I have to use the analogy. Nobody knows how this year will unfold so what you are trying to advice clients how best to position themselves in a world of uncertainty. In the same way the skips are analyzing all the angles/what the other team might do, farm clients have to do the same with markets. Create profit potential with acceptable levels of risk. No one shot makes a game. The same with markets. The idea is to review the sitution, have a plan/act on it, modify when necessary. Your challenge is to be the coach - help develop the plan and modify as necessary, push for commitment/discipline/action when warranted. As with a skip in curling, the consultant never takes the broom out of the skips hand. They call the game. Your clients make the decisions.

[TOM4CWB]

Charlie;

I know you have worked both sides of this situation, Gov. and private, and you and I both know many consultants who have lost everything trying... in good faith, working to be good intellegence for farmers in the marketing field in western Canada.

I only want Digger to know what sand trap the consultation field is... and to be prepared to encounter the worst.

If there were good profit margins in the Ag industry... we could afford more marketing help... or would it just be we would not need marketing help... you choose!

Very good friends I have known who worked very hard to succeed in this business...

Be honest Charlie; how many do you know can make a full time business of being a marketing consultant, without subsidising income from some other source...(buying grain, trading futures, farming... etc.)?

[charliep]

No problem. Just giving you a hard time.

You are right about it not being an easy road to hoe for the consulting industry. Success stories have come under the following models.

1) More complete financial planning services. I still would not provide full scale market advice recommendations without a full understanding of the business including its business plan/objectives, financial situation and risk taking ability. A market plan has to bring in things like crop insurance, Super Nisa, etc. As an example, I would recommend forward pricing this spring if some has already not been done. If a farm manager tells me they won't because they might not get a crop (things are better this spring but the risk is there), my next question is do you have crop insurance? The risk of drought is a lot bigger than the decision to price 25 % of your new crop. The farmer also has the protection of the variable price benefit (first 10 % price change is their risk). If the issue is a weather market, then I would ask where they think the drought is likely to occur and would they consider buying call options on some of the crops there.

2) An approach I have seen is to have the farm manager commit a certain volume to a consultant (Pro farmer USA did this). Based on the market analysis groups recommendations, the consultant was able to market a percentage of the crop during the year. The cash sale wasn't necessarily made by the consultant but there was some three way agreement with a grain company/companies up front. Success measure at the end of the year would be where the consultant based average price ended up relative to the average.

3) A variation of the above is marketing services for crop share landlords. How many of you have crop share rental agreements where you are the trigger puller on price (or the landlord is relying on you for a major part of their decision making information)? A consultant can take some of the preassure of making difficult/unbiassed marketing decision for your landlords.

[melvill]

Digger, here's another thing you might want to watch. One of the Alberta government departments, Justice and Attorney General, I think, is reviewing the act that governs the Alberta Institute of Agrologists with the idea of implementing a new act in the spring of 2004, I believe.

At that time, I think one of the changes to the act will be a requirement of membership in the AIA to do the kind of market consulting that you are considering. I would suggest you contact Graham Gilchrist at 780-632-5417 to get a little background. Graham is the immediate past Pres. of the AIA and is pretty knowledgeable on this issue.

Agrologists are basically people that are working in the field of agriculture as advisors or consultants or researchers, etc. They are required to meet certain qualifications. The AIA is their professional organization much like the org that chartered accountants or lawyers or doctors belong t. The AIA web site is at http://www.aia.ab.ca/. Have a look.

[Digger]

Thanks for the feedback. I really do appreciate it.

I don't think anyone is going to "give only good market advice" 100% of the time. I like your curling analogy Charlie. I view it as being more of a partner with a producer trying to maximize his returns and reduce his risk via a well thought out grain business plan. I will go back to what I said in my first posting, "consider all the time, attention to detail and money that goes into growing the crop vs how much of the same is afforded the selling/marketing of that same crop".

I don't think that farmers are uneducated on markets etc etc or too stupid. In fact I think they are more aware of these things then ever before. There is more marketing information available now than ever in history, right at our fingertips. Does this make it any easier? I think it makes tougher.

[TOM4CWB]

Digger;

I believe marketing, just like accounting, growing grain, working with people, being a successful business owner;

All of these have skill involved... but 9 times out of 10... the person who is dedicated and gifted in the area required for success will do well all other things being equal.

Otherwise a person can do well, if they know where they are not gifted... and are smart enough to know their limitations... and get some help.

When I know I need help... then I am ready to pay for that help.

But if I am innovative... I will learn from my consultant... and in time will not need my teacher any more!

Therefore if a marketing consultant does an excellent job... this person will work right out of the job that he created... and must then look for new clients... a never ending job.

Have fun Digger!