| Cropping Marketing your crop
Formal approach
best for marketing
Setting a strategy: MarketAg’s W Mark
Martin says being told about crop marketing
is one thing, planning and implementing a
successful long-term strategy proves a lot
more difficult for a lot of broadacre croppers.
MarketAg's W Mark Martin questions the professionalism of producers who contract experts for
agronomy support and financial advice, but then try to go it alone when it comes to marketing
their crops
G
At a glance...
▸▸Without a formal decision-making
process in place, grower selling
decisions are often distorted by
emotion, particularly when prices
start to work against them
▸▸Getting it wrong means growers
are also more likely to adopt a
reactive approach to future selling
decisions, rather than objectively
assessing the data in front of them
▸▸Growers who understand how
their emotions, personality and
moods affect their decision-making
behaviour can take steps to improve
their decision-making skills
▸▸Having a formalised marketing plan
gives you control, so you will not
be forced to sell due to outside
influences. And the decisions you
make about when to sell will be less
emotive and the outcome, for better
or worse, will be more palatable
48
Farming Ahead September 2012 No. 248
rowers who follow a formalised
marketing plan to sell their grain
reduce the risk of ad hoc, emotiondriven decisions which often result in
financial loss and regret.
Without a formal decision-making
process in place, grower selling decisions
are often distorted by emotion, particularly
when prices start to work against them.
Growers often focus on how to sell
their grain, but don’t put as much
emphasis on when to sell.
The impacts of poor decision-making
extend beyond the financial losses which
often result from ad hoc selling.
Growers can experience regret, and a
loss of self-esteem and confidence.
They are also more likely to adopt a
reactive approach to future selling
decisions, rather than objectively
assessing the data in front of them.
Panic selling
An example is panic selling.
These selling decisions are driven by
the fear of making a mistake, the fear of
publicly admitting a mistake, and finally,
the fear of being judged.
To avoid the regret of getting it wrong,
we follow the crowd and take comfort
from making the same mistakes as
everyone else.
Decision-making can also be distorted
by our tendency to be risk-adverse when
it comes to gains, but risk-seeking in
terms of losses.
To illustrate, it is common for growers
to sell as soon as prices rise slightly above
their target.
Yet, they often will hang back and
watch prices continue to drop, especially
if their target has not been reached and
even though each $10 fall has a material
impact on their profit and loss.
Better understanding
Growers who understand how their
emotions, personality and moods affect
their decision-making behaviour can
take steps to improve their decisionmaking skills.
Effective decision-making involves:
• Gathering the facts
• Identifying a number of alternatives
• Assessing the alternatives
• Making a decision
Growers who gather information to
justify a decision they have already made,
are not effective decision-makers.
www.kondiningroup.com.au
Marketing your crop Cropping |
They are also less likely to be happy
decision-makers.
Happy decision-makers are able to live
with their decisions, regardless of the
result, because they have been in control
of the process.
They do not feel that they are gambling
with the outcome.
Once the decision-making process has
been refined, I would encourage growers
to develop a formalised marketing plan
that focuses on both the how and when
to sell.
The steps to developing such a
marketing plan include:
• Calculate the gross margin of each
crop to ascertain a break-even price
(this is the initial price target)
• Identify cash flow requirements (this
will determine when receipts from
sales are required)
• Determine when to sell in relation to
the production cycle (for example pre/
post planting, pre/at/post harvest)
• Determine how much will be sold and
at what price at those times
• Determine how to sell and price any
pre-harvest sales (for example, swaps,
options, physical sales)
• Determine what price to target
• Determine how much to carry over to
the next crop and how long to hold it
for
Better control
Having a formalised marketing plan will
give you control of your sales program,
so you will not be forced to sell due to
outside influences.
More importantly, the decisions you
make about when to sell will be less
emotive and the outcome, for better or
worse, will be more palatable.
It often amazes me that professional
advice is often sought by farmers in the
areas of agronomy and finance — but not
so for their grain marketing.
This is possibly a legacy of years of
pooling and statutory marketing bodies.
The equation is simple but the
execution may need additional resources.
The use of a contracted professional
marketer may enhance returns, save
dollars and make the decision making
process a more disciplined, less emotive
and more pleasurable process.
I am often involved with farmers
through marketing events.
But in reality they need to get regular
(drip feed) information if they are to put
it successfully into practice.
One-off marketing events are often
forgotten a couple of months later.
And farmers all-too-often revert to
their old ways.
So, to reinforce my last comment,
farmers need professional assistance
with their marketing to not only help
develop strategy, but for it to be a regular
process of receiving information, updates
and strategy revision.
This will ensure the information is
retained and that behavioural change has
occurred. Contact ▶ W Mark Martin
0429 462 000
[email protected]
Figure 1 Learning and behaviour change curve
1
2
3
4
5
6
7
8
9
Information retained after presentation with one exposure
Retention with weekly reinforcement and follow-up
Behaviour change with weekly reinforcement and follow-up
Source: Market Ag
Grain Aeration Protects
your Profits
Australia’s most
versatile grain conveyor
Take the guesswork
out of protecting
your grain!
Fan, Duct and Controller
Systems to suit all
grain storages.
WALINGA AGRI-VAC delivers:
GRAINSAFE 3000 Aeration Controller
(with drying mode option)
Store grain longer
Avoid hot spots
Manage insect activity
Prevent mould and sprouting
Suits most existing storages
Designed for Australian conditions
Protects seed germination
Allows early harvest.
Health & Safety – no
dangerous moving parts
Cost savings – full use of
existing & tempory storage
Versatility – suck & blow
grain up into silos & difficult
locations
Capacity – models to
suit your needs, up to 100tph
Reliability – proven
performance in Australia
since 1983.
DMS/CVAC-2723B
Freecall 1800 242 699
[email protected] www.customvac.com.au
www.kondiningroup.com.au
No. 248 September 2012 Farming Ahead
49