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Post-Harvest Marketing: NASA Inspired, but not required

Date: 
Author: 
Glenn Wachtler
Educational Opportunities: 
Articles
Interests: 
Grain, Young, Beginning Farmers
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Many tough tasks require breaking the job down into smaller tasks to complete a mission.   Famously, NASA engineered a successful 1969 moon landing by using a project management style approach.   The key was to break the complicated mission into many smaller objectives.  They spent an equal amount of time and resources making sure those pieces fit together in the entire plan.   In the end, NASA realized they wouldn’t complete their mission by the end of the decade, if there wasn’t honest communication between the responsible parties for each part of the project.  They decided to openly share each serious challenge they faced, especially their attempts that ended in failure.  Those failed attempts were not met with criticism; they were met with new ideas and effort from the rest of the team.  With this approach, the learning curve accelerated and the mission was accomplished.  
 
Marketing plans don’t have to be rocket science.  “Capturing the Carry” in the market can be a powerful strategy and routinely making forward sales adds a premium to the spot market to compensate for storage costs or the risk of growing and owning a crop.  A good plan takes advantage of these premiums offered for forward sales.
 
Achievable target prices with two-month windows segment my own plan.  Grain prices have seasonal tendencies to them and I emphasize selling slightly more bushels in the higher spring months and avoid pricing in the late summer and early fall.  If my target price is not achieved, I will still forward contract half of the bushels I intended to market in that two month time period in order to reduce risk.
 
I use the NASS (National Agricultural Statistical Service) projected price, CME futures prices, my own break-even price, advice from trusted advisors, and my own level of risk tolerance to help determine my target pricing for each individual period.  Something I learned, is struggling over selecting a target price can lead to indecision.   Don’t let that happen, the price you select is just your target.  The time period is your trigger to forward contract.  Trust me, you will learn from your mistakes and that is okay!
 
If my target pricing is easily exceeded, I catch up on previous planned sales and get an early start on a portion of the bushels in the next pricing period.   Any unsold bushels are liquidated in the seasonally stronger spring period to avoid holding unpriced bushels to July and beyond.
 
If used effectively, adding more tools like hedge to arrive sales, basis contracts, elevator contracts, and rolling forward pre-harvest sales can increase my return.  At the same time, I am executing my pre-harvest plan for next year in similar fashion to complete my overall plan.
 
Complex or simple, make your very own plan and have accountability.  Don’t forget to communicate your plan with other interested parties and ask for honest feedback.  You will see your learning curve accelerate!
 
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