marketing gurus

[disker]

Just curious if any of you have marketing guys hired to help with decisions about selling the crop and forward pricing. Are they worth it?
disker

[Jman]

It is no wonder grain farmers are always complaining they have no money, by spending upwards of $3/acre for someone's opinion.

Nobody can predict future markets, and every farm has specific marketing goals and requirements.

All you have to do is follow the futures / cash markets daily (this doesn’t take long), phone the grain companies regularly to find out their basis levels (or ask them to call you – place pricing orders), and form good working relationships with them. Subscribe to marketing newsletters such as Profarmer or Kostal, etc, that provide marketing advice . These are a lot cheaper than these "Guru's". Also don’t waste your money of political rags such as Agriline / Agriweek that do not provide a marketing advice, al their information is freely available from the CGC (with respect to S D numbers). And don’t listen to the regulars in the coffee shop bragging about the prices they locked in, most of these claims are highly exaggerated (so too are their yield claims). These are the guys who read Agriline.

Lock in prices on a proportional level throughout the year so you never hit the low, price a little more aggressively when there is rallies that allow you to lock in a profit. If you get caught and find yourself oversold or unsold and you are worried the markets will continue to go against your favour, then purchase options (like an insurance policy).

In this day and age, where the average farming unit is nearing 7-10,000 acres, if you do not have someone within that business familiar with marketing its production, you are in trouble.

Also, there are lots of free, relatively low cost marketing courses offered thru the provincial governments and local universities.

Understanding markets is rather simple; having the ability to follow a marketing plan, without emotion getting in the way is difficult.

Good luck.

[silverback]

7-10,000 acres ?

Wow!

So that is about 3 farm units per township?

Must be pretty lonely in your area.

[craig]

Jman I do believe there is a place for market consulting and as your comment was made it is in the area between studying the markets and knowing how to implementing a marketing plan. If your marketing skills are middle of the road then maybe it is not worth it but if your marketing skills don't exist you are better off with help than done. I would suggest market consulting is not much different that agronomic consulting. Determine what you can do, what skills you have and what's missing. If you can hire someone to fill in the blanks and you are making more than you did before then you are getting a return on your investment.

[nw9flynn]

Jman,
If you are paying for newsletters then you have hired a marketing guru. Both of the newsletter you mentioned are worth while. I personally would never pay someone $3/ac, however I do use grain brokers on a pay per trade basis. I also enjoy talking to commodity borkers as they have a good perspective on what is happening with markets around the world.

[Zaphod]

Has anyone heard of paying someone on a small percentage of revenue earned from grain sales? That would line up the guru's motives with the farmer's.

[wmoebis]

Yep it's called CWB LOL!!!

[JohnKenneth]

good thread, i've been wondering about the same thing lately, and i'm just about decided to sign on with a local guy. i need someone close to home to talk to about these decisions, and my gut says it will pay, but after the last couple of years i've got a long list of things in the farm that need a couple grand spent on, so i haven't cut the cheque yet.

i've spent a year researching the options, and have found a few marketing services that charge between 2-4/acre. i heard about a guy in se sask who was going to try charging big farmers a percentage of sales he helps with, but don't know if it ever got off the ground, and since i'm not big (certainly less than the 7-10k 'norm'!) i'm afraid that kind of consultant wouldn't be working hard enough for me.

i think newsletters are a lot different than having a personalized service, they just give the 'when and how much' advice, but they don't really care about where i am, what else i have for sale, when i need cash, or the quality of my crops in the bin when they write in their faxes what i should do. grain brokers ditto - i enjoy talking to them and the info is usually useful, but at the end of the day all they want to do is move volume, not get me the best price.

anyway, at least we have 'options' these days. for what it's worth, at this stage i'm planning to go with a top-end advisor who does it all, cost analysis, cash flow and storage planning, price discovery AND market analysis, because my brother just quit, there's more land coming up for rent that i want, my kids are too young to help and someone needs to take charge of this side of the business. in the past i've gotten the job done with just a newsletter but that's not where i'm at today. wheat board pricing options alone have my head spinning, although with any luck maybe that will get easier soon...

[TOM4CWB]

JK,

I agree with those who talk about CWB services in marketing... this system has to be most unfreindly.

A good marketing advisor who knows what they are doing could make a 10% difference in gross quite easily. Therefore paying them 1% would not seem at all out of line!

[crusher]

I find listening to a marketing adviser helps to pull the trigger, rather than watching the market go up and up and then down and down and down and down.

Lee and Charlie are a great piece of the puzzle, plus you get more than what you paid for!! Charlie's tip on trying DPC's has made me big $$$$ - thanks C.P.

[melvill]

Gee, crusher, thanks for the kind words. I'll get your cheque cut at noon today!

In all seriousness, though, I'm finding that farm managers, even the ones that are astute marketers, feel a little -and sometimes more than a little - overwhelmed with all the "good" market the info they have access to. Some of them find that a marketing advisor is the little nudge that helps them make decisions.

If you are considering signing up to a marketing advisory service, ask for references. In my opinion, references are the most tool in helping you decide on which one to pick.

The second thing to look for is back-up. By that I mean, what are the advisor's back-up sources of information. Is it Pro Farmer Canada or Kostal or Informa Canada or ???

[chaffmeister]

IMHO - I know Greg Kostal personally and am very familiar with his work. He is - without doubt or reservation - the best grain analyst in Western Canada.

[JohnKenneth]

ah yes, the question of who's the most right most of the time... i think we have to realize the difference between good research and bad, and respect taht there's a talented pool of mostly good guys out there writing newsletters, but none of them are right all the time on every crop in the mix. a marketing 'service' has to take it a lot further for me than just put out sensible s/d estimates.

the group i found subscribes to all those reports, digests everything they write, corroborates it with in-house opinions/analysis and supplements it with research into special crops that nobody else writes on (ex. sunflowers and dry beans)... THEN develops a firm opinion and strategy.

i haven't found this approach elsewhere. the other guys all use one opinion, and frankly there are some big ego's around that sometimes miss the big picture.

this way, it seems like i'd be getting all the different analysts' opinions at once, which saves money and a lot of reading time, in addition to i think being a 'better' opinion than just one person's. this group's in-house analysts also have a lot of commercial analyzing and trading experience with a variety of grain companies, so i don't doubt they know better than me who to listen to on which commodities.

guess that's why they're so expensive. do you guys think i'd be nuts to pay this company $13,000 per year? i totally believe i'll make it back, and quickly, and like i said in an earlier post i really want to get some help, it just seems like so much to spend compared to my old $200/yr weekly fax...

[TOM4CWB]

JK,

What kind of guarentee to they offer on satifaction?

What authority must you give them in trading... what kind of options and futures pricing do they offer... at what cost?

DO you have the opportunity to say NO on a recomendation they make... if you believe they are off base?

[JohnKenneth]

well there's no guarantee on satisfaction but after a couple of years they've only lost one client, due to factors totally outside their control, which suggests existing clients are satisfied and making more money than they would on their own. the foot-tall stack of reports they provide will show me a lot i didn't know before, and somewhere in there will be performance indicators.

they adjust the marketing strategies based on whether a farmer has and feels comfortable trading. they like clients to have brokerage accounts becuase of the flexibility and added opportunity, but they respect that some aren't comfortable with that. they track monitor all the hedges they recommend and will keep an eye on my own spec trades too if i want.

there's no power of attorney, but basically i can ask them to do as much as i trust them to do. i'm definitely going to give them my cwb pin so they can take care of all that paperwork right away. beyond that, i'm not sure right now.

obviously all the final decisions are still mine to make but they take all my inventory, cop, cash flow, storage, even management style into account in making the decisions, and help me find the best price every time we do need to sell, so i'm not sure why i wouldn't take their advice after all that and the expense of it.

suppose then i'm also free toyell at them instead of myself afterwards if it doesn't go as planned!