Ag lenders say that a key trait of successful farmers is proactive marketing. Chris Geswein, general manager of river elevators for ADM, a global food processing and commodities trading company, offers these tips for starting out in marketing your crops.
Know your break-even price. “One of the most important things when you’re running a business or you’re farming is knowing what your costs are, knowing your breakeven,” Geswein says. That’s your pricing floor to aim for.
Know your local markets. “Know what your options are. Are there exporters? Are there processors? When do they normally buy? Are there times when they pay more? For river terminals, the markets from October to March are generally more competitive when they’re exporting. They’re less competitive in the spring during the South American harvest,” Geswein says.
Use forward marketing. “It’s important not only to market the grain that’s in the bin, but also to market the new crop going forward,” he says. “It’s good to be proactive. Prices tend to be higher during the growing season before harvest.”
Diversify your marketing methods. “Along the line of marketing in general is diversification, whether it’s using different contracts or a different shipment window,” he advises. Those include futures contracts, basis contracts, futures options and specialized contracts, such as an average seasonal price contract.
Beware of black swan events. These are rare, unexpected events that affect markets. It means you have to keep up on the news. “They can happen anywhere in the world and can have an impact,” Geswein says. The COVID-19 pandemic is an example.
