Only about 25 per cent of Manitoba farmers have a commodity marketing strategy in place for 2015. It’s important to remember that it’s never too late to get started, because good planning is key to successful commodity marketing.
Here are three steps and free tools available from Manitoba Agriculture, Food and Rural Development (MAFRD) to get you started.
1. Know and understand your farms cost of production
- Cost of production estimates can be used a starting point for writing for your marketing plan. Estimates are available for crops and livestock and you can adapt them to your operation using your own farm records.
2. Understand and use knowledge of commodity price seasonality and cycles to seek out opportunities
- All commodities have seasonal price trends and cycles, so farmers must make a point of understanding them.
- In Markets and Statistics, you will find concise overviews of important Manitoba crops, along with dozens of graphs illustrating acreage, production, input costs and revenues.
- Outlooks and other reports provide provincial, national and global perspectives on supply and demand. Keep it simple and big picture by focusing on fundamentals like supply and demand, rather than technical signals.
3. Formalize your marketing strategy
- Define goals and ensure they are results-driven, measureable and timely.
- Set price targets based on the farm’s production level, production risk and financial risk. In your plan, identify which tools will be used, including futures contracts, cash sales and forward contracts.
- Be specific: state what, when, how much and what method will be used to sell.
- MarketPlan is a record-keeping system to track grain sales and remaining inventory, monitor sales and see the implications each sale has the farm’s financial status.This worksheet will allow producers to run different forward-pricing and cash sales scenarios, to assess breakeven points and profitability.