To share these best practices more broadly, we recently sat down with Travis Brunner‡, president of Sunrise Agribusiness Solutions‡, in an exclusive webinar hosted by Brownfield Ag News‡. During the conversation, we had the opportunity to talk about what farmers should be considering as they head into 2021 and how they can create the best marketing plan that allows them to make a move when the time is right. Here are a few takeaways from that conversation.
Planning is Paramount
2020 has certainly thrown everyone some curveballs, especially those in the ag industry. We have faced a global pandemic, unlikely weather events and substantial changes in the commodities market. As farmers have tried to plan for an uncertain future, we’ve worked with them by taking a smart, disciplined and relaxed approach to risk management. Our motto this year – as it has always been – is to have a marketing plan and stick to it.
The best way farmers can prepare for the unexpected is to have a marketing plan that is well thought out, written down and agreed upon by key stakeholders within the operation. And then when it comes time, execute on that plan. The key is not to look for homeruns with every sell off, but to look for singles and doubles that will allow you to meet cash flow projections and continue successful operations. When you start to deviate from your marketing plan is when challenges start to arise.
Creating the Plan
Having a business mind is incredibly important in the ag industry. Farming is a business, and sometimes we forget what risks we really are taking. We often ask farmers what their break-even number is, and it is surprising how often they don’t know what that number is.
To get there, we encourage farmers to sit down with us, usually during the off season, and help build a break-even number and then put a plan around it. When you work with your financial partner and know what your cost of production is, you will be better prepared for today and the future. And the more you drill down on where you are making money, losing money or breaking even will help. We like to see farmers be as granular as possible on break-evens and then make decisions based on that information.
Putting the Plan to Use
We applaud those who take advantage of opportunities that are in line with their marketing plans. It’s a sign of astute management. If you carry a significant debt load, you want to be mindful of how you’re going to make payments and understand total debt obligations and then make smart moves that get you to the finish line. We always say, “You won’t go broke making a profit.”
The bottom line when it comes to best marketing practices is to work with your banker on a plan, get approval on it from your key stakeholders and then implement it when the time is right. Having a strategic plan in place will allow you to react quickly to changing market conditions as they occur in your area, setting your operation up for short and long-term success. To learn more about this topic, listen to this recent Brownfield Ag News webinar‡, and happy planning for 2021!
Our Agribusiness Division serves all areas of agriculture, including producers, processors, suppliers and manufacturers of equipment and goods, throughout a 12-state area. Learn more about how we serve agribusiness or read more articles about ag.