In addition to working as a farm family coach, I work as a grain marketing advisor. My marketing clients pay me to advise them when and where to sell their grain. I develop a plan for each farm, tailor-made to the individual needs of the business. We prepare a budget for the upcoming crop year, then address cash flow needs, storage limitations and business management preferences. I spend time analyzing markets and tracking local pricing, then add in the specific needs of each farm to market their grain.
Recently, I was sent a newsletter from a local grain buyer titled “Seven Ways to Streamline Your Farm Marketing.” The author highlighted several tips to overhaul your thinking when it comes to grain marketing. The goal was to ease the overwhelm that many feel when it comes to marketing their grain.
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As an advisor, I agreed with all of the tips. As a coach, it struck me how much the list paralleled transition planning work — an area where many feel overwhelmed as well. For each marketing tip listed, I came up with a similar piece of advice for transition planning.
The first: “focus on profit, not price.” In other words, price is only one piece of the puzzle when it comes to profit. Your focus should be on the whole picture — on achieving a specific profit margin, not just a specific price. As an advisor, I think that’s good advice. As a coach, I also think it’s good advice. Consider a family farm owner who focuses primarily on getting the business to the next generation but doesn’t give much attention to creating a healthy business culture. It’s a good primary focus but shouldn’t be the only area that gets attention. A healthy business culture will create next-generation family members who want to be involved instead of getting burned out and leaving. Shifting some focus toward the culture on your farm will pay dividends down the road.
The second tip: “commit to planning.” The author explained how using your historical yields and tracking your costs will help answer key questions regarding profit margin, how much to sell, when to sell and at what price. As an advisor, I like this tip. We all know expecting our plans to be followed exactly is foolish but that doesn’t mean making plans is. As a coach I’d say the same thing. Make a plan for the future of your farm business. Where do you want to be in a few years? Ten years? What are your family members planning for their futures? How are you planning to transition ownership of your business to the next generation?
And just like making a marketing plan, succession plans can go out the window at any moment. But that doesn’t matter, because the real value of committing to a plan is that it creates conversation and gets everyone on the same page. So many farm families never talk about their plans, then when the unexpected happens chaos ensues and family farms die.
Forward progress
Tip number three was to “establish a reasonable desired profit.” Every farmer would love to sell their canola at $28/bu. and walk away with a $650/acre profit. While that price was available just a few years ago — and $28 for canola is probably once in a lifetime — it wouldn’t be reasonable to plan a budget with a selling price that high.
The parallel advice for succession planning would be to make a reasonable amount of progress each year. Succession doesn’t have to happen overnight but it does need to happen. It’s difficult, tedious work that is often complex and awkward — but if you don’t schedule that meeting, nobody will. Issues that could be solved in a few conversations can drag on for years because they get booted to the bottom of the priority list. Set some realistic goals and make forward progress.
The fourth tip on the list was to “sell meaningful amounts.” In other words, you must sell all your inventory to make a profit. That’s a no-brainer, isn’t it? Keeping grain in the bin forever won’t generate any money.
My corresponding advice for this one is to make your business more meaningful. What are your core values and how can you align your actions with those values? Cultivate deep and authentic relationships and find purpose in something larger than yourself. Practice living in the moment while acknowledging and appreciating the good things in your life.
Number five: “expose yourself to the market.” The author explains how there are resources or tools available that can help you reach your profit margin goals — resources such as hedging, target contracts and futures-only or basis-only contracts. Another resource would be a grain marketing advisor like myself, wink wink.
You also need to “expose yourself to the market” when working through a succession plan. Accountants, lawyers, investment/financial advisors and communication/conflict coaches are commonly part of the team of professionals that assist farm families. You are not alone; ask for help when you need it.
The sixth tip on the list was to “understand crop insurance.” Farming is a risky venture and knowing how crop insurance works can reduce your risk and protect your revenue. Most of you use crop insurance — you don’t have to farm for long before counting on it to cover poor weather.
Insurance is also important for your succession plan. Sometimes that can look like a life insurance tool that is used to transfer equity to a non-farming sibling. Sometimes insurance can be in the form of inter-spousal agreements or unanimous shareholder agreements that work to protect the longevity of your farm business. Another form of insurance is to write down all your verbal agreements and have them notarized by a lawyer.
The final advice given on the list was to “avoid the hecklers.” The author describes how listening to myths or fables about marketing can distract you from the plan you made earlier. As an advisor, I hear the coffee shop fables where a producer brags about how much they sold their wheat for. While there may be some truth to these stories, they don’t tell the whole story and often omit the ugly truths.
Myths surround succession planning work as well — for example, “there is a right way and a wrong way to do it” or “other people have it all figured out” or “it’s too hard and can’t be done.” Myths like this can keep you from moving forward with your own succession. It’s important to ignore these false messages and focus on your own situation. Avoid the naysayers, listen to your mentors.
A good marketing plan is not unlike a healthy succession process. There are ways to streamline both of them to lessen the overwhelm you may feel about them. Remember, you are not alone in this work.
