As farmers await relief in the form of better commodity prices and a stable trade environment, marketing experts are urging producers to go into the coming growing season with an actionable marketing plan.
“The farmers and the ranchers are not doing well in South Dakota,” farmer Todd Mangin said. “It’s not going to be a pretty picture next year.”
Mangin farms near Gettysburg, South Dakota, and is president of South Dakota Wheat Inc., the grower’s side of the commodity group.
Many farmers are in financial trouble, he said, and the make-up payments the government doled out through the Market Facilitation Program weren’t enough to make a difference.
Farmers in South Dakota received $19.4 million from the first half of Market Facilitation Program payments, the nonprofit South Dakota News Watch reported in November. Just less than 2,900 producers received payments, most of them totaling less than $20,000, the News Watch analysis found. A second round of payments was approved in mid-December.
Mangin supports President Trump’s efforts to revise trade deals and hopefully hold China to its promises of buying a certain amount of U.S.-produced agricultural products.
“Does it hurt? Yeah, it hurts a lot, but trade deals in the past … have not been good – period,” Mangin said.
Make a marketing plan
China’s retaliatory tariffs on U.S. soybeans is leaving a projected carryover of 910 million bushels, according to the U.S. Department of Agriculture. That’s a lot more than expected, and it’s suppressing prices, said Lisa Elliott. Elliott is a commodity marketing specialist for South Dakota State University Extension. She spoke in Sioux Falls at an extension workshop on ag economics March 1.
Elliot doesn’t see an end to the market disruptions anytime soon.
“Volatility is going to persist,” she said.
Elliott encouraged producers to think about what risks they want to take on and create a marketing plan that’s actionable and adaptable.
John Melius of Hurley & Associates agri-marketing in Brookings spoke at the workshop as well. He encouraged producers to take a business-minded approach to their marketing plan instead of planning based on emotions and opinions of what the markets might do.
“Marketing should be logical,” he said.
The first step, he said, is determining your cost of production. It’s an exercise less than a third of producers take on, he said. The plan should be based on financial matters such as cash flow needs and timing, the logistics of storing grain, variability in production and personal goals.
Storage is a big component. While market-minded planners might use their grain bins as a sort of deposit box, business-minded planners view it as a tool to manage carry and basis, he said, comparing it to the way elevators store grain to make money.
He strongly encourages producers to have their plan in writing. “What gets written down gets done,” he said.