Seems like every meeting you go to lately, people are telling you about the importance of
having a written marketing plan. According to Roy Smith, a Nebraska farmer and marketing expert, it's not so important that you have a written marketing plan as it is to simply have a plan and follow
it. "If writing your marketing plan down will help you understand it and follow it, then by all means write it down," says Smith. "But just writing a plan down for the sake of have a written plan
won't turn a bad plan into a good one."
Here are Smith's six ingredients for a good marketing plan:
1. Set your goals:
"Most of us want to get as much profit as we can, but we don't want to put too much of our business at risk. Set a goal that lands somewhere in between."
2. Decide which tools you're going to use:
"There are many different types of marketing tools you can use, but in many cases, cash contracts are all we really need. I'm not a believer that futures and options are absolutely necessary. I use them because they give me some flexibility that I can't get with cash contracts. But whatever you do, make sure you understand how the tools work."
3. Implement your plan:
This is where most peoples' marketing plans fall apart. Do you base your sales on price? Do you use time as a trigger? Or perhaps you use a technical signal. Unfortunately, the market doesn't care what price you want. Just because you set a price goal it doesn't mean the price is going to go there, Smith says. "A technique I use a lot is time and price. For example, I know that in most years, between the 1st of April and the 15th of May there will be some spikes in the soybean price. So about the 1st of April, I look at the possibilities of hitting the price I want somewhere during that time period. I'll set a target – for example $6/bu. – but if I don't get $6 by the 15th of May, I'm going to sell anyway. That ensures that if I want to get 20% of my bean crop sold, I will get it sold. If I don't get the price I want, at least I'll get pretty close to it."
4. Know your panic button: "What will you do on those occasions where the price doesn't move the direction you expect it to? Make some decisions as to what actions you will take when this
happens.
5. How will you get out of contracts? "Cash contracts are typically settled at harvest time when you deliver your crop. But if you use futures or options, you need a plan to bring
those contracts to a successful close."
6. Keep it simple stupid:
Don't get into the options market if you don't understand it. "The problem a lot of people have is they make their marketing plans so complicated, there is no possible way they're going to implement them – especially when they get busy in the field," he says.
Smith publishes a monthly "Farmer to Farmer" newsletter focusing on seasonal price trends and marketing strategies. For more information, contact Smith at 402-298-8570 or send email to
