For many farmers the goal of growing crops is selling their product when the market is up. It can also be the biggest challenge that they face each season. To get the most out of their yield, agriculture experts suggest farmers start with profitability and have a deep understanding of the cost of production so they can sell when the market is in their favor.
One thing that is key to a profitable marketing plan is knowing the cost of production, said Chief Operating Officer of FarmLogs, Shalin Parmar. A recent FarmLog survey showed that a staggering 74 percent of farmers don’t have a set plan for how much of their crop they plan to sell by a certain date.
When it comes to selling crops, it’s all about time and price goals.
A best practice is to plan to market up to your crop insurance but leave a small margin open. This allows you to be in the best position when it comes to making a reasonable profit and using a more diversified and disciplined approach.
Chip Flory, host of AgriTalk, recently said that by having a marketing plan, you’ll be in a better position to hit your yearly objectives. You’ll also expose yourself to enough risk that you’ll be able to take advantage of better pricing opportunities later. Don’t gun for the highest prices, Flory advises. If you sell the high in the market, it’s coincidence or luck. According to Flory, what matters in risk management is the revenue available from current prices, basis and expected yield, and how that revenue compares to your costs of production. Take advantage when a good marketing opportunity presents itself.