Most farmers will say they're pretty good at raising crops; few will say that about marketing their crops. Betsy Jensen has some suggestions that might help.
Producers need a marketing plan, one that includes both persistence and flexibility as well as "knowing your cost of production (and) also updating your cost of production," Jensen said.
Jensen and Josh Tjosaas, farm business management instructors at Northland Community & Technical College, spoke at the recent Prairie Grains farm conference in Grand Forks, N.D. The annual event, held online this year, was designed primarily for farmers in northeast North Dakota and northwest Minnesota.
Jensen looked at some marketing mistakes often made by area farmers. They include:
- "Waiting for the highest price to sell." Trouble is, "We just don't know where the market will go." For example, farmers with unsold 2020 soybeans, the price of which has risen sharply, won't actually make money until and unless they sell their beans at a favorable price.
- "Selling only on emotion."
- "Selling only when you need cash." Instead, farmers should plan ahead to meet future expenses.
- Storing grain for long periods in commercial facilities, which is costly and cuts into potential profits.
- Making decisions on potential outcomes that are unlikely to occur. "Trying to beat the odds is very hard to do."
- "Not selling enough or selling in too-small increments." Jensen cited the example of a farmer who was proud of selling some soybeans at an attractive price, even though the amount sold was only a small fraction of his total production.
Tjosaas looked at potential crop prices, particularly spring wheat, and production costs for northeast North Dakota and northwest Minnesota.
"Can we make money at these levels?" he asked. Doing so on spring wheat will be difficult, he said.
Jensen said, "Spring wheat is relying on other commodities to pull it over. Wheat by itself isn't real impressive, but if we can throw in some bullish soybeans and some bullish corn (prices), maybe the tide will rise and bring wheat with it."
She noted that China is buying U.S. wheat, but generally not the hard red spring wheat used to make bread and grown by northeast North Dakota and northwest Minnesota.