Presentation is loading. Please wait.

Presentation is loading. Please wait.

Econ 339X, Spring 2011 ECON 339X: Agricultural Marketing Chad Hart Assistant Professor 515-294-9911 John Lawrence Professor

Similar presentations


Presentation on theme: "Econ 339X, Spring 2011 ECON 339X: Agricultural Marketing Chad Hart Assistant Professor 515-294-9911 John Lawrence Professor"— Presentation transcript:

1 Econ 339X, Spring 2011 ECON 339X: Agricultural Marketing Chad Hart Assistant Professor John Lawrence Professor

2 Econ 339X, Spring 2011 Fear, Greed, and Ego Fear of making a bad decision -- Watching prices slip away as you wait Greed of expecting even higher prices -- Not taking advantage of good price opportunities Ego of wanting to claim you caught the market high -- “Lake Wobegon” marketing

3 Econ 339X, Spring 2011 Greed Fear Ego

4 Econ 339X, Spring 2011 Changes in Price Volatility Source: Zulauf and Roberts, Ohio State

5 Econ 339X, Spring 2011 Historical Soybean Volatility Changes Source: Zulauf and Roberts, Ohio State

6 Econ 339X, Spring 2011 Factors Leading to Higher Commodity Prices Source: USDA-ERS, Trostle, July 2008

7 Econ 339X, Spring 2011 Marketing Plan To avoid fear, greed, and ego dominating your marketing, have a plan and stick to it. A marketing plan outlines your market strategy and your marketing objectives. It should examine marketing opportunities before and after harvest.

8 Econ 339X, Spring 2011 Marketing Objectives  Get the highest selling price  Pretty tough to do  More realistic objective: Obtain better than average prices  Reduce price risk  Cover cash flow needs  Minimize tax liability Look at short and long-term goals for your business

9 Econ 339X, Spring 2011 Building a Marketing Plan 5 basic steps:  Estimate number of bushels/animals to sell  Calculate breakeven price  Project price and production scenarios  Compare pricing tools and analyze market opportunities  Develop a pricing plan

10 Econ 339X, Spring 2011 Bushels/Animals to Sell  What’s your expected production?  What do you have in storage?  What about on-farm use? Breakeven Costs  What are your production costs?  What are your storage costs?  On-farm vs. off-farm?  What are your cash flow needs?

11 Econ 339X, Spring 2011 Scenarios  Seasonal price trends  Weather outlook  Export picture  Livestock outlook Tools and Opportunities  Market tools: Futures, options, forward contracts  Government tools: Crop insurance, marketing loans, CCP/ACRE

12 Econ 339X, Spring 2011 Tentative Pricing Plan  Outline realistic pricing targets  Have periodic price targets and quantities to sell  Have patience and be willing to reevaluate price goals  Remember it’s hard to lose money when making a profit

13 Econ 339X, Spring 2011 Seasonal Pricing Patterns Source: USDA, NASS, Monthly Price Data

14 Econ 339X, Spring 2011 Source: Ed Usset University of Minnesota, CFFM

15 Econ 339X, Spring 2011 Source: Ed Usset University of Minnesota, CFFM

16 Econ 339X, Spring 2011 Source: Ed Usset University of Minnesota, CFFM

17 Econ 339X, Spring 2011 Another Template Source: O’Brien, Grain Marketing Plans for Farmers, Kansas State University, July 2000

18 Econ 339X, Spring 2011 Another Template Source: O’Brien, Grain Marketing Plans for Farmers, Kansas State University, July 2000

19 Econ 339X, Spring 2011 Another Template Source: O’Brien, Grain Marketing Plans for Farmers, Kansas State University, July 2000

20 Econ 339X, Spring 2011 More Examples University of Nebraska: “Achieving Success with a Business Plan: Case Study to Prepare a Grain Farm Business Plan” (CC424) University of Missouri: Purdue University: AgRisk website: Iowa State University: “Mapping the Route to Better Prices: Developing a Marketing Plan” - Available on the class website

21 Econ 339X, Spring 2011 Decision Trees Source: Usset, U. of Minnesota

22 Econ 339X, Spring 2011 Decision Trees Source: Wisner, Iowa State University

23 Econ 339X, Spring 2011 Class web site: Spring2011/


Download ppt "Econ 339X, Spring 2011 ECON 339X: Agricultural Marketing Chad Hart Assistant Professor 515-294-9911 John Lawrence Professor"

Similar presentations


Ads by Google