36 / 52
Winter
2018
Grains
West
36
HOUGH ONE MAY ASSUME
marketing grain is relatively
straightforward, in practice, it’s
anything but. Before even dipping a toe
into marketing waters, lots of homework
needs to be completed—call it Grain
Marketing 101. Those who execute this
homework most diligently generally
tend to be the most successful.
The first step in any comprehensive
marketing plan is to establish a firm
understanding of your production costs.
This includes understanding the break-
even point for every crop. The next
step is charting out cash flow needs for
the balance of the year. “It’s important
to understand how these things ebb
and flow on your farm operation,” said
Jon Driedger, senior market analyst at
FarmLink Marketing Solutions. “Bill and
loan payments, input purchases and any
other significant financial draws on the
business need to be clearly laid out in the
plan.” Surprisingly, there are still farmers
who are figuring this out in the office of
the local elevator as they bring grain in
for sale.
Part of creating a solid marketing plan
is understanding the particular situation
of the farmer and his or her operation.
“Besides the cash flow demands, what
storage is available for production?
How well capitalized is the operation?
What is the farmer’s risk tolerance?” said
Driedger. “All of these, and especially
the last point about risk, really build the
marketing framework around which a
consultant would craft a marketing plan
or schedule for a grower.”
In Driedger’s opinion, the worst-case
scenario—and one that happens far too
often—is a farmer with a big payment due
in a couple of weeks, wondering what he
should sell to meet it. “This is a situation
in which the farmer has now really given
up any control over what he manages to
sell that grain for,” he said. “With a plan
in place and complete transparency on
cash flow demands, this would have
been built into a selling plan. Anticipating
these needs in advance is vital to selling
when the market tells you to, not when
you have to.”
Brennan Turner, CEO and president of
FarmLead, has much of the same advice
as Driedger. “The building blocks to
any successful farm marketing plan is
understanding costs of production,
annual cash flow needs and a full and
complete picture of the quality of
the production you have to market,”
said Turner. “It’s this that paves the
foundation of an educated, informed
and, ultimately, successful plan.”
In order to understand the market
and make informed decisions, Turner
believes there is a mound of information
that needs to be digested by a farmer.
“There’s some basic information like
who the primary global competitors are
and how their situation impacts you,”
he said. “Western Canadian farmers
are acting in a global market, so they
do need to understand some of those
nuances. Keeping up using free or paid
daily or weekly analyses can keep you
plugged in to what is driving the market
that day or that week.”
Also, Turner pointed to the somewhat
cyclical nature of the markets. “Over
time, you can start to see those cycles
and build into
your plan a
strategy to deal
with them—either
avoiding having
to sell at certain
times or taking
advantage of
traditional good
prices.”
Creating a
marketing plan
requires the
same discipline
as is given to the
agronomic side
of the business.
Matt Price of Sunterra Farms acts as
crop manager for his family’s diversified
farming operation, a vertically
integrated operation that includes its
own specialty grocery stores. “We have
a disciplined approach to our marketing
plan,” said Price. “We plan out our
marketing as part of the overall business
strategy. We look to hedge 25 per cent
of production by seeding time, another
25 per cent of the cereals by the time
they are heading and a final 25 per cent
about four weeks prior to harvest. This is
a strategy that works for our operation.”
Though Sunterra’s size and scope
allow it to put considerable resources
into its marketing efforts, Price said
there are parallels between this larger
operation and smaller family farm
situations. “The best price will meet
your cash flow needs and your delivery
preferences. Price certainty provides
assured income when required, at a
level you’ve previously determined
meets a number of farm goals.” He also
pointed out that, because markets are
dynamic and sometimes impossible to
predict, holding out for the best price is
a very risky marketing strategy. This lines
up with Turner’s advice to make a sale
when you can, not when you have to.
Not every farm operation is as
vertically integrated as Sunterra and
not every farmer family can devote
one person to marketing. Wade and
Holly Cusack farm with their son and
daughter-in-law
in Fort St. John,
B.C. in the Peace
region. “We
hire lawyers and
accountants,” said
Wade. “Hiring
an expert who
lives and breathes
it every day,
who has access
to information
beyond what my
son or I would
ever see, just
makes good
business sense.”
Cusack has worked with a variety
of third-party marketing services.
“We’ve chosen to work with FarmLink
Marketing,” said Cusack. “Really, we
work with our particular adviser with
whom we have an excellent relationship
and rapport. I’ve found it’s important to
have a good professional relationship
T
“The building blocks to any
successful farm marketing
plan is understanding costs
of production, annual cash
flow needs and a full and
complete picture of the
quality of the production you
have to market.”
–Brennan Turner