Even though George Jackson has been farming in Alberta for many years and has a pretty good handle on crop marketing, he figures it doesn’t hurt to kick his skills up a notch.
Jackson, who crops about 8,500 acres east of Calgary, will be among the first group of farmers in Western Canada to participate in this month’s training session of a new program called Know-Risk Farm Management.
Offered by DynAgra, a south-central Alberta agri-services company, Know-Risk is a new program designed to give farmers the skills to make better marketing decisions based on their farm business.
“We know how to grow crops, but I have always been a firm believer that marketing is probably the most important part of what (farmers) do,” says Jackson, who produces grain, wheat, barley and canola. “I try to stay on top of it myself. I get as much information as I can, I usually do some forward selling early in the year — depending on the year and the markets — and sometimes I lock in a basis or lock in a flat price.”
TAKING MARKETING TO THE NEXT LEVEL
While Jackson figures he has done “okay” with his marketing he knows there is always more to learn. The marketplace is changing, and there are a wide range of tools that can be used. “I’ve only been introduced to this program and will learn more during the training,” he says. “But the program promotes more of an all inclusive approach to marketing; it teaches you some discipline. You need to know your cost of production, which we do, but then you get a better understanding of what markets are doing, get to know the various tools you can use in marketing, and then apply different scenarios to see what will give you the best return.”
Jackson, 65, will be taking the Know-Risk Farm Management training session with one of his employees who has “way more computer skills than I do, and can figure things out using new technology, much faster than I can with a pencil.
“We know some of it, but we also receive tons of marketing information every year, and this type of program will help us figure out what do with that, and hopefully show us how to do a better job,” Jackson says.
The Know-Risk FarmManagement program costs $825 per month. It provides on-going marketing advice and consultation through the marketing year, says Remi Schmaltz, manager of corporate development with DynAgra. There is no contract to sign. Farmers can subscribe to the program, go through the training and after a month or two or, at anytime, if they figure it isn’t providing any benefit, can opt out, says Schmaltz.
DynAgra is offering the program through a partnership with the Chicago-based RMI (Risk Management Incorporated).
MARKETING AS A PROCESS
“A lot of marketing is done based on the emotional side of thinking,” says Schmaltz but our objective is to tie marketing information and marketing decisions back to your farm business. (It’s) is a process not a product.”
Schmaltz says often marketing decisions are based on two powerful emotions — fear and greed. Fear decisions are often made as markets are trending lower and greed decisions are made as markets rise.
“Everyone likes to talk about $13 canola, but the reality is that we don’t often see $13 canola and if we do it’s not going to stay at the price very long,” he says. “So what this program — this learning process — can do is to help farmers to be proactive. It helps to rein in that human factor and help producers manage profit margins. It means you may not always sell at the peak of the market, but it can help to find a reasonable profit. And no one ever went broke selling for a profit.”
John Snell, an RMI managing director, makes the point that “no one can guarantee what prices for any commodity are going to be next month or next year. A lot of people can make forecasts, but that’s all they are — forecasts.” He says good business involves knowing your costs of production, and developing a disciplined marketing plan that directs producers to sell when there is an opportunity to hit targets they set for decent profit margins.
The Know-Risk farm management program is built around cost and production figures for each farm, it can reflect different levels of risk tolerance, and it can be designed to market crops on individual timetables such as when a farmer needs cash flow, or needs to make more bin space available.
Farmers are introduced to Know-Risk management software during a 20-day the training period, set up a trading account, “create a case” or enter in figures for their own farm, including cost of production and yield estimates and then look at their margins based on that day’s crop prices. As they work through training they learn about various marketing tools, and run different scenarios and learn how to set margin triggers. All who subscribe to the service will be assigned an account manager who works with them in managing their marketing plan, and who will call when the market hits the margin targets which have been set by the farmer.
“Our goal is to educate the farmer and empower them to make these decisions,” says Schmaltz. “It is to provide him the best information, the marketing tools and the backing to make the best marketing decisions,” he says Schmaltz says providing farmers with the marketing skills through Know-Risk farm management can improve opportunity and reduce anxiety whether the market is trending up or down.
For more information on Know- Risk Farm Management contact Schmaltz at 1-800-941-4811 or visit their website at www.dynagra.com.
LeeHartisafieldeditorforGrainewsin Calgary.Contacthimat403-592-1964orby emailat [email protected]