When it comes to selling and marketing their grain, Canadian producers are faced with a variety of options. Producers must consider all of their choices to formulate the best strategy for their farm. But, in order to do so, they must first understand grain marketing as a whole and how they can use it to their advantage.
While grain marketing is not an entirely new idea, many producers may not be aware of the advantages of developing a personalized marketing strategy tailored to their unique needs. The key to success is being active in the grain marketing plan, re-evaluating your steps and understanding market information and analysis. This article will provide insight into the basics of grain marketing and help get you started on your journey.
What is Grain Marketing?
Grain marketing is the technical art of selling grain. It begins with a series of informed decisions – when to sell, for how much, to who – and subsequent actions that turn your grain into a profit. Through the lenses of data, profitability, and business sustainability, smart grain marketing considers market analysis as well as marketing decisions, and understanding the difference between the two is key.
Market Analysis focuses on external factors: macro trends, local prices, and things that impact supply and demand (weather, politics, global trends). This includes understanding where prices come from and what the signals might mean to each crop in your marketing plan.
Marketing decisions are 100% about your farm and focus on internal factors: risk management, cash flow needs, management styles, individual business goals. They are informed decisions that allow your farm to make a profit and build a sustainable legacy.
What are the Benefits of a Grain Marketing Plan?
Developing and implementing a smart marketing strategy is one of the first steps towards establishing a profitable farm business. A marketing strategy will help you make reasoned marketing decisions, manage price risk, and improve market returns. Like anything in farming, a plan helps. It’s important to manage the risk you face and take advantage of opportunities that come up. Having a good understanding of your marketing can and should set you up for long-term success.
What is Involved in a Grain Marketing Plan?
Analyze the market
Gather unbiased market information from credible sources to make smart grain marketing decisions. Monitor market conditions to make a sale when pricing is strong.
Manage the risk
Choose crops with the greatest income potential within the crop rotation used and understand the risk associated with growing that crop.
Understand your position
After calculating your benchmark sales prices, you’ll have a solid understanding of where you stand in an ever-changing market.
Use your strategies and tools
Once you’ve identified your target price and position, you can develop marketing strategies that work with your goals and preference.
Set Timelines and Evaluate.
Develop goal breakdowns and annual timelines to keep your plan on track. Continue to review your plan and adapt it as fit.
For a full breakdown of a sound grain marketing plan, check out our recent blog post on the topic here.
Who is Involved in a Grain Marketing plan?
Simply put, grain producers are the cornerstone of the grain market. You use a combination of knowledge, experience, and technology to grow and sell your crops.
Advisors and Analysts
Working with an unbiased grain marketing advisory team can not only educate you about grain marketing but also help you capitalize on every opportunity that comes your way. Your grain marketing advisor is an expert at selling your grain and works to help you make the best financial decisions possible. FarmLink’s analysts have an in-depth and data-driven approach to understanding the complexities of the market. The two work together to assist you with the marketing aspect of your farm while you can focus on what’s most important to you, your job, and your strengths.
Grain is usually purchased by feed yards, mills, and ethanol plants. Producers normally store their grain in a grain elevator or on the farm until it’s time to sell it after harvesting their crops.
Storage and Transportation
Grain elevators are usually located along railways or highways to facilitate transportation. They may also be near shipping ports. Harvested crops are transported to elevators by farmers.
Before storing the grain, the operators weigh and test it. They inspect the grain for debris, such as stalks, and determine moisture levels. They don’t want grain that rots or molds prematurely, destroying the rest of the crop in storage. When producers sell their crops or a deal expires, the grain is transported to its final destination by trucks, trains, or ships.
Why is unbiased information and advice important?
Regardless of where you get your information or receive services from, you should always get an unbiased opinion from a broker, dealer, or grain company that isn’t trying to persuade you to sell your grain – this is a safe way to ensure that you’re selling your grain at the right time and at the right price.
It takes time to adapt to the grain marketing process . But with the right advisory team beside you, your confidence will grow more and more every day. You’re not just paying for the expert service; you’re paying for the type of peace of mind that only a highly trustworthy, working relationship can provide.
Why does grain marketing need a long-term game plan?
Strong grain marketing plans aren’t intended to get the best deal on every grain sale. It all comes down to long-term results. And, to achieve long-term sustainability, you must continually review and change your strategy. Examine where you might have done better or what your strongest selling points were, and formulate tactics to close any gaps and maximize future opportunities.
A FarmLink grain marketing advisor would be happy to talk in more detail about the benefits of grain marketing and how we can be an asset to your team. Start achieving your financial goals, and build your legacy on solid ground.