Farmers Need a Marketing Plan

lousianafarmland3A marketing plan is a comprehensive blueprint which outlines an organization’s overall marketing efforts. As a farmer, the idea of having a marketing plan may seem like one of those things that would be nice to implement if only you had the time. Find the time.

Having a marketing plan in place before planting is imperative to your success as a farmer. In the marketing plan, the sale of the crop will be planned out ahead of time. Many farmers make the mistake of doing the same thing year after year because that is what they’ve always done. Sometimes they win and sometimes they lose.

With a marketing plan in place, all decisions on when to sell will be based on the marketing plan and not on emotion at the end of the season. It is important to do the research ahead of time, know your numbers and decide before planting what you’re going to do, when you’re going to sell. Meet with a commodity broker and find out when the historically high times to sell in a season are. A plan that has worked well throughout the years is the 1/3 rule plan.

The 1/3 Rule – A tried and true plan:

– Sell 1/3 of your crop at the beginning of the season
Lock up the price so you know what you are getting ahead of time. You will know 1/3 of your total income before the season even starts. As with all farming, it is important to purchase crop insurance just in case you have problems with your crop.

– Sell 1/3 of your crop in the middle of the season
Pick a point ahead of time, a historically high priced time in the season. Don’t change it based on emotion as the season starts! Stick to this date you chose before the season started. Do your research then, choose wisely and then stick to it.

– Sell 1/3 of your crop at the end of the season
Sell after harvest. At this time, the market could be higher than it has been all season or lower. Either way, it is 1/3 of your total income.

Why does this work? Because you are spreading your risk throughout the entire season. If your commodity price goes up and down throughout the season, your risk is reduced because 1/3 will be sold at different times throughout the season. Many farmers wait to “see where the market goes”. This is not a good plan. This is like gambling in Las Vegas but with your entire income. This is an emotional plan that will have its highs and lows. It won’t be steady and in the long run, it usually does not outperform the 1/3 rule. Using the 1/3 rule will help spread your market risk.