Hope isn't a plan of action....
One of my weakest skills as a new farm owner & operator is marketing. What is the best way to market my grain? When? How do I maximize my profit? I've put a lot of thought into it and sought out resources to help me over the last six months. I sold all of my 2013 crop and I would give myself a "C" grade overall.
Lentils: I contracted my lentil crop with a local grain elevator just prior to them being harvested. I wasn't sure how many bushels to contract because the crop wasn't cut yet. How do you know for sure? After talking with some neighbors, I decided to contract 5,000 bushels. Boy did I feel relief when that 5,001th bushel went through the combine! I think I did pretty well with the lentil marketing. I got a good price, I got them hauled off early, and all the lentils were Grade #1 when they arrived at the elevator.
Wheat: All of my wheat went into storage on my farm, as none of it was sold yet at harvest time. I then contracted half of my wheat crop in October for November delivery. The trucks will be at the farm next week to haul it off to the elevator. This contract was a 12% protein bid and the price was fair.
Then I sat and watched the market. Down...down...down. Finally this month I contracted the last half of the wheat for February delivery. That contract is a 14% protein bid. The price is okay, I'll still make a profit...but not as good as it could have been.
So why the C grade for marketing? Well, I had other tools that I could have used to help me and I didn't. I could have done some hedging. I could have done a Put option to protect me against the falling wheat prices. I could have done some pre-harvest contracts. And I haven't done anything yet to get the 2014 crop priced and locked in at a profit.
So I'll stick with the C grade. I made a profit and survived. It wasn't a failure, but there is a lot of room for improvement. I guess that's one of the things I love about the farm life...there's always the hope of doing it better next time.
But as we used to say during my days in the military...hope isn't a plan of action. You can hope all you want, but it takes study, planning, and work to get the results you want.
It's time to build my plan of action...