Guidelines set clear strategy for next crop

Guidelines set clear strategy for next crop

Agribusiness
SELLING STRATEGY: Grain marketing guidelines step out the marketing plan for any given year and include flexibility for seasonal conditions.

SELLING STRATEGY: Grain marketing guidelines step out the marketing plan for any given year and include flexibility for seasonal conditions.

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I HAVE always been interested in how much of the farm financials and operation are contained in people's heads.

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I HAVE always been interested in how much of the farm financials and operation are contained in people's heads.

Ask a question about anything to do with the operation of the property, what yields they are expecting or their plan for the coming year and they'll be able to tell you without much hesitation.

While this is happening, I flick through months of notes trying to find the exact answer.

The 'in the head' calculation and strategy is what has worked well for many through the years. No messy bookkeeping, more time on-farm and being involved in the day to day operations.

Why write it down if it's all in my head?

But does everyone else know what is going on?

Everyone's attitude to risk and the reaction to an event, such as drought, is very different.

Agriculture is seeing a changing of the guard and a succession of knowledge as young people return to farms to help, work and improve with their own ideas. The only thing missing is experience from the good, the bad and the ugly years that make up all aspects of agricultural production.

When succession begins, it is important to consider not only how management of the farm changes hands, but also how the bookkeeping, all the records inside your head and the knowledge of the farm are going to be transferred along.

Grain marketing is a part of this transition.

How do the people coming on to the farm know what is a good price? How much do you lock away at those numbers? What types of contracts do you use?

Everyone's attitude to risk and the reaction to an event, such as drought, is very different and it varies from generation to generation based on their own experiences. This is especially important in grain marketing, where opportunity exists, but not without taking on risk.

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Seeing drought and the impacts it has for the first time or having to wash out a contract at the peak of the market can influence how risky we consider some decisions to be. Last year changed the feeling and emotion of grain marketing, especially for those who had not yet experienced a drought market. For some it is a case of "we had to wash out last year and I don't want to have to do it again".

This is where grain marketing guidelines come into the mix. Guidelines step out the grain marketing plan for any given year and include flexibility for seasonal conditions. It takes the emotion out of the decision-making.

Put together with experience in mind and looking at what average production and area looks like, guidelines ensure that year to year there is some consistency behind the decision-making.

These guidelines should be created as a team, openly discussed and without any mystery of where the often quoted 30 per cent forward sold comes from.

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Much of what makes up guidelines is already sitting within the head of the main decision-maker. They know why and when certain decisions are made but sometimes this is not communicated to other people.

It is important for everyone to be on the same page and to understand where a perspective is coming from, so the next generation has knowledge from people who have seen it all before.

Succession is always going to come with challenges. Differing opinions and experiences can clash. The incoming generation wants responsibility but needs experience and guidance and that has to come from someone who knows. This process should be considered a real opportunity for the business to make it viable for many years to come.

As with everything, succession just needs to start somewhere, and this is epitomised by a quote from the inspirational author Karen Lamb, "A year from now, you may wish you had started today".

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