How much should be spent on marketing?

[dmlfarmer]

My New Years resolution is to do a better job of marketing the crops that I grow. So I need to know how much money top producers are budgeting for marketing the grains they grow. Is there any benchmarks on the amount of money ($/tonne or % of gross income) that should be allocated towards marketing crops?

By costs of marketing I am looking for more than simply the costs of phoning a number buyers and taking the best price. I am trying to find out what top producers are or should be spending on everything connected with marketing including costs of finding buyers, hedging and options costs, risk management costs, dollar value of time spent following markets, market information and analysis costs, etc.

It seems lots of top producer can tell me exactly what their production costs per tonne or bushel are but there seems to be little information on what farmers should be budgeting for the marketing of their production.

[Fransisco]

I find that it's not so much a question of cost as it is a question of time. For instance you can spend a lot of money on very good newsletters, but if you hardly ever get around to reading them and thinking about what's going on your not going to get your money's worth out of them.

[SASKFARMER3]

I have a couple i pay for and a few free. Plus about 10 market pages each morning plus paper on line. Takes about 1 hour. Black berry gets me info all day. Information helps out a lot. Years ago paid for expert only to find he was copying a free report I got every day.
Have a good one.

[TOM4CWB]

dmlfarmer,

The most important input to making 'good' marketing decisions... is understanding the market.

I would think a minimum cost is now at least 3 hours a day... with DTN and a couple of good newsletters as input!

Getting unbiased good information... is the biggest challenge... as clearly the 'regular' media is not here to give us solid economic information that can be used to make our decisions upon!

[cottonpicken]

I am not sticking up for ignatawierdo,but that article sucked.

If you could go back one year in time and say all the things that happened this year to all the talking pin head experts they would have thought you were a raving lunitic(something i can relate to).

365 short days from now it will be obvious to everyone what is happening.

[wilagro]

I agree...it was an attack on Iggy by someone with a bone to pick and who was clueless as well.

[TOM4CWB]

C.P./Wilagro, If you were doing business in the late 70's early 1980's... 2008-09 looks like a walk in the park.

Then it was 20% interest... inflation through the roof... twice the unemployment... we have a VERY long way to go down... to get close to where we were then!

This is looking like a 30 year cycle...

[TOM4CWB]

dmlfarmer;

How much are you responsible to manage?

A decent size family farm... will gross well over $2 million... which means $4M in money management.

If a good manager looks after this business... they could easily return $300K for the business in a year.

Good Labour management is the number 1 issue... so the CEO/manager can actually do the work... to earn the $1,000/day... they should be able to create.

[cottonpicken]

Tom i think you should give up trying to understand economics.

Interest rates went to 20% because of inflation,the economy could just barely handle it.

The baby boomers were in their prime,the amount of debt in the system was managable, things were different,we still had descent production bases.

Then started the worst bear market for commodities.

Now we have massive inflation,but interest rates cant be raised.

Why?

Unmanagable levels of debt everywhere.
An upside down population pyramid.
And a consumption based economy.

Will the bond market drive interest rates higher?
I doubt it,because just as i predicted a year ago,the government is now buying its own bonds with printed money,keeping yields low and interest rates down.Monetization of debt.
What does this mean?
Hyper-stagflation coming down the pipe.
The usdx is fallimg into a dark hole.

The catch of the situation is that the tough descisions that need to be made wont be because those descisions would kill our economy.

[classicalliberal]

if you don't have any extra cash, talk to your banker about opening a futures account, if you don't already have one and sell futures for any delivery period that you see is profitable. As long as your banker knows that you are selling futures and not buying futures, then I'm sure he/she will be happy to get you the margin cash to open futures trading accounts for hedging purposes.

[TOM4CWB]

Classyliber...

I would NOT have a futures position... unless a full marketing plan... and input plan... is in place that can be taken to the bank and approved.

The markets are very Volitile... and if a large 'Short' position is taken on future production... it too often happens that at the top of the market... family, bankers, or management itself loose nerve....

Shorts are pulled off... and the market drops... causing a massive loss.

Cash selling has proven itself over the long term just as high a return as hedged selling.

Good management CAN mix the two... and perhaps flatten out income/expense streams... and raise profitability by maybe 10%.

It however does not take many blunders... do have the reverse senario... without good training and management!

KNOW what YOU are planning to acheive... and have family/management/Bankers approve the plan... before you do anything!

[cottonpicken]

If your looking for outside help,stick to the guys that are around a 70% success rate.Nobody can hit ag markets all the time.They are notorious for being the most volitile on the planet.

Acre/dollar cost averaging probably doesnt work with this expense.

If you love doing it do it yourself,if you hate it hire it out.