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| The subject of marketing is a 'catch-all' for many folks. The marketing of ag products, in concept, is basic from which many complex strategies can be implemented dependent upon the particular situation of the participant and the interest and discipline of the participant.
Over some 55 years in the marketplace, I quite possibly devoted 20+ years in the design of both simple and sophisticated marketing programs for producers. This requires time to prepare (however for the producer the basic do not require much time once a program is in place).
A lot of folks view marketing as a way to increase their bottom line. Maybe it does...maybe not. Speculation has served many producers very well over these many years. Interest in marketing began to rise at the end of the ASCS binsite and government storage era. Up to this point, storage income from commodity credit was the source of revenue for the grain trade along with some limited basis trading by the more professional grain elevator managers.
For the vendor, or designer, of a marketing program, prior to the past 20 years, was not an attractive profit center. A great deal of time is required to design and implement a marketing program with the result of transacting a few contracts of futures as a commission return. Is the reason I expanded my business into the commercial-industrial sector. As illustration, the results from 100 average sized producers in 1975 (pick any date) would return to the broker an income slightly in excess of minimum wage; in contrast, in dealing with large, knowledgeable and commercial traders I was able to generate a monthly income sometimes far in excess of six figures a month.
Then, the frustrating part of working with some producers (after a marketing program is in place) is the 'after the fact' comment..."gee, we missed the $2.00 price move in soybeans, I would have been better off with out a marketing program." Most brokers gave up at that point.
I have witnessed a variety of "farm crises" ....we lose a few producers during each cycle due to "speculation at the wrong time."
In a long term perspective, the value of farmland from the Land Grant price of $1.25 per acre to current levels has been served very well by inflation. Inflation has also been a benefit for those who are lucky in speculation. Government programs reduce the need for marketing programs for some folks.
Speculation is exciting. Speculation is high risk. Most lose. To be an 'informed marketer' requires some time and expenditure of funds. The ag community, of which I have been around all of my life, is not noted for spending money on marketing tools....they will however, spend money (sometimes and amazing amount) on speculative financial vehicles.
Over the years, a variety of folks approached me about establishing a division to work with producers (beyond what I was doing)...I told each their idea "was noble" -but in reality they would end each year earning less net income than any single one of their prospective clients..PLUS ASSUME THE FINANCIAL RISK OF THEIR CLIENTS (each cycle there are a few non-payers) ...The real fact of the futures and SECURITIES industry...the regulators exist to PROTECT THE CLEARING MEMBERS OF THE EXCHANGES...NOT THE INVESTOR....the broker (in between) generally ends up holding the bag.
In the final analysis, interest in marketing will always exist...in practice ..speculation will continue and SURVIVE..it is part of the human psyche.
Edited by SeniorCitizen 7/21/2010 06:47
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Ken's meeting
