Making a Grain Marketing Plan and Executing on It

There is a big difference between having a grain marketing plan and making a grain marketing plan that you actually execute on.

The grain marketing plan itself is pivotal to running a modern, successful farm business. And like any good plan, there is flexibility and the goals are benchmarks to making decisions throughout the year.

When I think about grain marketing, I’m often reminded of three quotes that have stuck with me.
If you don’t know where you’ve been, you won’t know where you’re going.

• Failing to plan, is planning to fail
• The numbers don’t lie
• Let me explain how this applies to grain sales

If you don’t know where you’ve been, you won’t know where you’re going.

Over the past few years, I’ve had the opportunity to speak to producers at several different events about the importance of cash flow. There’s lots to keep in mind about managing your cash flow, but really, it boils down to knowing what you need cash for and when you need it. The best way to understand that is to look at your historical operation and how cash flow has worked (or not worked) for you in the past. In other words, know where you’ve been.

You get cash from either grain sales or through cash advances and loans. But those cash advances and loans need to be paid off by grain sales later so the cash in your business is primarily driven by marketing your grain. When you understand your cash flow both in terms of how much and when, it’s easier to build a grain marketing plan that can supply those needs.

• At what times through the year do I need cash for my business?
• What are my current and anticipated cash needs?
• What circumstances usually lead to cash flow issues?
• What successful cash flow management strategies have worked for me in the past?
• Where are all my cash flow sources for the coming year? Which are the last resort options?
• That’s knowing where you’re going!

Failing to plan, is planning to fail.

Once you understand your cash flow, it’s easier to make a meaningful grain marketing plan. Your plan should be realistic and take into consideration all the factors that are in your control, and the ones that aren’t. For example, if you need some significant cash in the first three month of the year, is it realistic to count only on buyers who rely entirely on rail movement? Winter rail movement is notoriously unpredictable, and contracts can drag on. That’s maybe not the most reliable option. So, do you have a plan B? And a plan C? If you know your cash flow needs are high during these months, create a plan that gives you flexibility and multiple options.

• What can I realistically expect this harvest?
• What markets can I target to get the price I need for my grain?
• Who and where are the buyers I can work with?
• When do I need to sell my grain and how long can I store it?
• Don’t just create a plan, create a plan that reflects the realities of the industry.

The numbers don’t lie.

Sometimes the picture painted by the numbers isn’t a pretty one. Your financial reality dictates some of the decisions you make when executing your grain marketing plan. You might see numbers you don’t like or that you wish you could “explain your way out of”, but the reality is, the numbers don’t lie. And they force us to make some of our most difficult decisions. When the numbers are bleeding, you must make the decision to cut your losses. Take for example, the decision to store grain year after year waiting for your target price. At some point, the cost to store that grain, and the cost to finance your cash flow eliminate the financial gains you’d get from that better price.

• What is my break even point for each field?
• Should I buy more land or rent?
• Should I purchase new equipment, used equipment, or lease?
• Should I store grain or sell at current prices?
• Should I look for better prices and terms with new buyers or stay with the same ones I’ve always used?
• The numbers don’t lie, so let them help direct your decisions.

Planning, Revising, and Executing your Plan

Grain marketing plans are key to your success but are worthless unless you execute on it. Plans are fluid and will change and evolve. Markets and global trade – which you don’t control – influence the price you get for your products. Your grain marketing plan is a guide so you can adjust as markets go up or down. Make it a point to schedule time in your calendar to sit down and review and revise your grain marketing plan for the current conditions.

You have many opportunities throughout the year to execute against your plan. You probably receive daily texts or email from your main buyers, or you may from time to time receive inquiries from brokers or other buyers who you don’t usually deal with. The best way to successfully execute your plan is to maximize your opportunities. But the world is a big place so how do you do that efficiently? There is a plethora of online solutions (see our earlier Blog Using the Right Online Tools) to help you execute on your plan successfully.

Let CXN360 Help You Along the Way

A CXN360 membership for example, gives you a simple way to expand your opportunities to execute your plan.

• Easy to find and contact new buyers (or work with your current ones) who are all licensed or insured
• Receive real offers complete with terms, location, price, and details so you can decide if it suits your plan
• Gain insight into real market prices for commodities in your area so you can adjust your plans if necessary
• Issue targets to multiple buyers (with no risk of over contracting) if you can’t find the right deal for you