FARMERS need to move away from the belief there is one clear marketing strategy that is best for all industry participants.
Instead they must focus on tailoring a marketing program that suits their individual management style and caters to their strengths.
That’s the recommendation of marketing advisor Mark Martin of MarketAg, a company providing advice to producers of agricultural commodities.
“There are a lot of different marketing styles that reflect an individual’s risk appetite, you have got cautious, daredevil and calculating approaches and all these styles have various pros and cons,” he said.
“The key is to find a way to best manage risk according to the business profile,” Mr Martin said, speaking at a GRDC advisor update in Bendigo, Victoria recently.
“You can help yourself make better decisions just by asking simple questions such as what will happen if something goes wrong, what does this decision mean for my cash flow and do I have the right information sources.”
Mr Martin said there was complex psychology in grain marketing decisions which meant people often chased their losses.
“We are risk adverse with respect to gains, but risk seeking when it comes to losses,” Mr Martin said.
“It means people will set a target price of $300/t, and then as they see the prices on the up, they will hold on for $305/t.
“The price drops a little, and they continue to hang on, and before they know it, the price is back at $250/t and they have missed a substantial opportunity.
“Everyone’s heard it, but you don’t need to be chasing the top price to get a good return for your crops.”
Mr Martin said farmers needed to embrace risk, as it was this volatility within the market that provided opportunities.
“You could be completely risk averse, and not make a decision at all, but you have to recognise that not making a decision is a decision of sorts.”
Other strategies include mitigating the risk, for example using products such as swaps and options, or outsourcing, which could involve putting grain in a pool for someone else to manage.
While Mr Martin said doing the sums, including looking at past history and statistics was important, he also urged growers not to underestimate their gut feel on marketing matters.
“You’ve got to just trust your instinct in certain cases.”
Mr Martin said timing of selling was a critical factor.
“We often worry about how we will sell, whether we pool it, take forward contracts or store it, but the timing can be equally critical.
“Figuring out a budget on predicted production based on what you know, then determining the selling cycle, how much will be sold at particular periods and what price will be targeted can be a really valuable marketing tool.”
Mr Martin said decisive action was preferable to continual second-guessing.
“Sometimes you just need to make a decision and stick with it.”