When it comes to making more money with crop marketing, there’s no magical formula —it requires attention, some learning, still more effort, and discipline. That said, there are some ways to make the process easier and more streamlined, which could, in turn, make you a little more profit.
John Snell, senior vice president at INTL FCStone, says that farmers need crop marketing tools that work, and that doesn’t have to be super complex or flashy. In fact, the more simplistic the decision making process, the better, so long as there’s really sound information to back up what they’re doing.
Snell says that in a margin business such as farming, knowing your cost of production, the seasonality of each crop type, setting reasonable — but profitable — target prices, and then using tools to trigger sales is key.
Emotions can run wild with even the most experienced of traders, so having a well thought-out plan to follow makes all the difference. It’s not reasonable or possible to plan to sell at the high each year; that’s a recipe for failure every time.
What this looks like in practice, he says, is first determining your cost of production, budgeting for profit margin, and being ready to lock it in — that means having an action plan ready, and making sure you’re notified when those stars align. Do a little homework and make sure you understand the tools available to you. And always overlay your crop pricing strategy over storage capacity, cash flow demands, and crop seasonality. Then, make sure you’re reviewing your plan often: more when markets are volatile, and less when things are quiet.
Hear more from John Snell in the audio below:
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