1. Agricultural Marketing
ECON 337:
Agricultural Marketing
Lee Schulz
Assistant Professor
Chad Hart
Associate Professor 1

2. Fear, Greed, and Ego Fear of making a bad decision
-- Watching prices slip away as you wait
Greed of expecting even higher prices
-- Not taking advantage of good price opportunities
Ego of wanting to claim you caught the market high
-- “Lake Wobegon” marketing

3. Ego
Greed
Fear

4. Changes in Price Volatility
Source: Zulauf and Roberts, Ohio State

5. Historical Soybean Volatility Changes
Source: Zulauf and Roberts, Ohio State

6. Factors Leading to Higher Commodity Prices
Source: USDA-ERS, Trostle, July 2008

7. Marketing Plan
To avoid fear, greed, and ego dominating your marketing, have a plan and stick to it.
A marketing plan outlines your market strategy and your marketing objectives.
It should examine marketing opportunities before and after harvest.

8. Marketing Objectives Get the highest selling price Reduce price risk
Pretty tough to do
More realistic objective: Obtain better than average prices
Reduce price risk
Cover cash flow needs
Minimize tax liability
Look at short and long-term goals for your business

9. Building a Marketing Plan
5 basic steps:
Estimate number of bushels/animals to sell
Calculate breakeven price
Project price and production scenarios
Compare pricing tools and analyze market opportunities
Develop a pricing plan

10. Bushels/Animals to Sell
What’s your expected production?
What do you have in storage?
What about on-farm use?
Breakeven Costs
What are your production costs?
What are your storage costs?
On-farm vs. off-farm?
What are your cash flow needs?

11. Tools and Opportunities
Scenarios
Seasonal price trends
Weather outlook
Export picture
Livestock outlook
Tools and Opportunities
Market tools: Futures, options, forward contracts
Government tools: Crop insurance, marketing loans

12. Tentative Pricing Plan
Outline realistic pricing targets
Have periodic price targets and quantities to sell
Have patience and be willing to reevaluate price goals
Remember it’s hard to lose money when making a profit

13. Seasonal Pricing Patterns
Source: USDA, NASS,
Monthly Price Data

14. Source: Ed Usset
University of Minnesota, CFFM

15. Source: Ed Usset
University of Minnesota, CFFM

16. Source: Ed Usset
University of Minnesota, CFFM

17. Another Template Source: O’Brien, Grain Marketing Plans for Farmers,
Kansas State University, July 2000

18. Another Template Source: O’Brien, Grain Marketing Plans for Farmers,
Kansas State University, July 2000

19. Another Template Source: O’Brien, Grain Marketing Plans for Farmers,
Kansas State University, July 2000

20. More Examples University of Nebraska:
“Achieving Success with a Business Plan: Case Study to Prepare a Grain Farm Business Plan” (CC424)
University of Missouri:
Purdue University:
AgRisk website:
Iowa State University:
“Mapping the Route to Better Prices: Developing a Marketing Plan”
- Available on the class website

21. Decision Trees
Source: Usset, U. of Minnesota

22. Decision Trees
Source: Wisner, Iowa State University

23. Class web site: Have a great weekend.
Have a great weekend.