Market News & Headlines >> Brock Consultant Katie Hancock's Blog: A Lesson On How To Teach Marketing
Insights from Brock Associates Consultant Katie Hancock
For producers looking to teach the next generation of farm managers, risk management is a special challenge. Marketing, in particular, isn’t a hands-on aspect of a farming operation, and thus it can be difficult to learn. However, challenging markets this year create a great opportunity to teach the upcoming successors.
Day-to-day activities involving agronomy and machinery are easy to pick up. I’m not saying it’s all simple, but we can learn so much by observation. You see not only one person, but a group of people in various activities. It’s also easier to notice mistakes and problems. Observation isn’t everything, but it makes for more open communication. For example, why did you do this and did you intend to have that result?
By contrast, marketing decisions are essentially a number on paper, and the emotional aspects of marketing can’t be observed either. It’s hard for the successor to know which marketing questions to ask.
Everyone has some kind of marketing plan. Some are more complicated than others, but there is always some kind of strategy in place. That strategy may include a variety of tools or may even be to sell everything as it crosses the scales. Written or not, it’s crucial to start the conversation.
I’ve included a few ways to go about teaching a marketing strategy:
Pre-planting plan. Typically, in the fall or winter, the marketer will start formulating a plan. Yes, the plan is likely to change throughout the year, but is useful to explain aggressiveness, break-even numbers, and tools. For a simple example, we’re planning to have 2,000 acres of corn, making 175 bushels, and are comfortable pricing 30% before planting with hedge-to-arrive contracts.
Pricing decisions. Assuming the producer breaks up pricing decisions, he or she could explain each sale. For example, I sold 10% of my corn today because I’m above break-even and I'm bearish corn because of the following fundamentals. This doesn’t piece together the big picture of marketing progress, but helps to explain the move. Like it or not, it will spark interest to see if you were correct! Any kind of interest in marketing is better than nothing.
Pricing progress. To give a big picture of progress later in the season, the producer could explain the sales to date—preferably in writing. For example, I expect to have 350,000 bushels of production, have sold 50% from the following sales, and have a $4.00 average. It’s also important to point out the remaining bushels will influence the final price average. Saying I have $4 corn when half is marketable at $3.40, will be misleading. This is also a chance to explain the strategy for remaining unpriced bushels.
End-of-year analysis. Showing what was done throughout the year does not explain the decision-making thought-process, but opens up the producer to explain the pros and cons of the marketing year. For example, these tools worked best and those did not, or I became more aggressive at this date because the crop looked to be better than my original yield forecast. It’s also a chance to explain new strategies for the upcoming season.
Ideally, each step would be taught, but any kind of information is helpful. Remember, a marketing plan is not only helpful for making decisions, but also for learning. Stressing the importance of marketing without examples will not train the next generation of marketers. Risk-management is difficult to observe and the successor may be interested, but not know where to start. Don’t be afraid to be honest about mistakes and regrets because that is sometimes the most helpful kind of education.
Email Katie at [email protected].