Getting Started in Ag: Marketing Options

Marketing Is Important

Most new or beginning agricultural producers are actively looking for ways to increase profitability in their business. Building a new business of any kind is difficult and production agriculture is no exception.

Managing the supply side of your business should include goals targeting profitability, such as maximizing production while keeping costs as low as possible. Goals should also include an objective to maximize prices received for the commodities produced, as part of an overall marketing plan.

Marketing strategies often take the form of protecting downside price risk through insurance, futures markets, or strategic market timing to get the best price possible. However, when producing a standard commodity (crops or livestock), the more traditional approach to marketing may not be enough to ensure long-term profitability, especially for smaller scale and new or beginning producers.

A marketing strategy that considers the demand side of the equation can also boost profitability. Instead of focusing on producing a standard commodity, some agricultural businesses go the extra mile to tailor production to what the consumer wants.

American consumers have become much more health conscious and local food focused in recent years, opening up many

Value-added products should add benefits for the customer based one or more of the following:

• Quality: Advantage from higher quality production

• Ease of purchase opportunities for production agriculture to fulfill those wants and needs. When considering how these opportunities might benefit your operation, start by examining the strengths of your business to determine what marketing avenues, if any, might offer the greatest potential.

• Form: Is it what the customer wants?

• Time: Is it available when the customer wants it?

• Function: Does it provide the functionality desired?

• Place: Is it where the customer needs it?

Not every niche or specialty product works well for every operation. It is important to research potential markets to determine if they might be a viable and potentially successful alternative in the longer term.

Next, you should list the goals and objectives for the marketing strategy, including financial targets. Finally, whatever marketing direction you choose, make sure to include any additional costs in your revised financial plans (cash flows, record keeping and financial analysis) to ensure that the strategy fits with other dimensions of your business.

Adding Value Through Marketing

Value-added, in an agricultural setting, is most often defined as any way you can add value to your current production by taking it to the next stage or level. This can be as simple as grinding corn to sell to small producers, selling certified weed-free hay or making a switch to organic certified production. In a livestock setting, examples include retaining ownership of a calf crop instead of selling them off the cow or selling show-quality (club) livestock instead of commercial livestock. There are nearly endless opportunities to add value in a way that fits with existing operations and addresses needs for additional profitability.

When considering a value-added approach, it is important to identify who your potential customers might be and what creates value for them. What product attributes are they looking for that your value-added product could provide?

There should be advantages to purchasing your commodities in the form of functionality, need, quality, or other factors. For instance, a cattle feedlot may be willing to pay more for weaned and preconditioned calves, since buying this type of cattle is less labor intensive and more profitable.

Direct Marketing

Direct marketing is most often thought of as selling directly to the end consumer. There are many steps in the conventional food supply chain that add costs before a product

Steps To Improve Bargaining Position

1. Determine a reserve price

2. Have a best alternative to negotiated agreement (BATNA)

3. Set a target price

4. Know your break-even costs and market information

5. Start the negotiation (offer the first price)

6. Focus on the target price

7. Be prepared to make a counteroffer

8. Be willing to make more than one counteroffer

Negotiation.FarmManagement.org reaches the customer. Selling directly to the consumer may allow the producer to capture more of the value that is gained through the supply chain, while satisfying the desires of the buyer.

This type of marketing is often more involved than a value-added approach and, depending on the business, often requires many additional steps to get the product into the hands of the consumer. Some examples include raising beef and selling it directly to consumers, selling farm fresh produce at a farmer’s market or offering “pick your own” options.

Risk management is also an extremely important consideration in this type of business, especially the human and legal risks associated with dealing directly with buyers.

Marketing Negotiation

Once you have settled on a marketing plan, the next step is to make sure you receive the best price possible, especially if your product is now worth substantially more. An often overlooked aspect of production agriculture is negotiating prices for the output sold; it is also an uncomfortable subject for many producers. Do you hold out for the highest price and risk losing a buyer? Do you take the first price offered? Or is the best course of action somewhere in the middle?

Producers often face several forms of risk in these scenarios; it is important not to let these risks overshadow an opportunity to seek the best price for your production. Valueadded or direct market producers tend to have higher upfront costs and are more likely than traditional operators to make concessions on price due to worries about finding more than one buyer.

It is important to prepare for the negotiation and ensure that a given price fits with your marketing plan. This includes knowing your break-even costs, understanding how a sale opportunity fits with your broader marketing strategy and resisting the urge to simply accept the first offer received.

For More Information

There are many more marketing options available to new and beginning producers than can be covered in this limited space. Visit farmanswers.org/ library for comprehensive resources on marketing education, including direct marketing, value-added marketing, commodity marketing and more. For more information on financial tools that can help you implement and evaluate your marketing plan, visit RightRisk.org.

The bucking chutes swung open April 1 for the Professional Bull Riders’ (PBR) Pendleton Whisky Velocity Tour (PWVT) at the Ford Wyoming Center in Casper.

Several Wyoming contestants made an appearance during the event, but Lane Lasley of Marshall, Ark. and Alex Cardozo of Indaiatuba, Brazil tied for victory.

Saturday night results

On the night of April 1, in front of a full house, Lasley and Cardozo dominated the arena, each riding a perfect two for two in round one and then riding for eight seconds in the final round to tie for first during the event.

Lasley got off to a quick start, filling a top 10 spot in the first round of competition when he rode White Thunder for 78.5 points. In the championship round, an outstanding 88.5-point ride atop the bull Not Yet catapulted him to the top. As a result, Lasley earned 102 Velocity Global points, bringing him to the 45th spot in the tour standings.

Cardozo delivered a pair of matching 83.5-point rides to secure the shared win. In round one, he rode the bull Figure Eight, and in the final round he covered the bull Eager Snake. The veteran Brazilian bull rider left Wyoming with 96.5 Velocity Global points. The 32-yearold cowboy currently sits 63rd in the tour standings.

Afonso Quintino of São Luís des Montes Belos, Brazil took home third place with 64.5 Velocity Global points. He currently sits in 14th place in tour standings. As the last sole rider to cover both of his bulls, he rode High Peral for 83 points in round one, then covered Crossin’ The Delta Line for 83 points in the final round.

Rounding out the top five for fourth place were Dakota Warnken, Dustin Herman and Rubens Barbosa.

Warnken and Barbosa both covered in round one, recording matching 86-point rides atop the bulls Chainsaw and Nautical Nightmare, respectively, to earn 39.66 points. Both contestants sat in the first and second place spot in round one, but were unable to cover their animals in the final round.

Herman earned 34.66 Velocity Global points for his 86-point ride on the bull Quick Draw in the championship round.

Qualifying for the tour

The PWVT began in 2014 as the sport’s premier expansion series, featuring young, emerging bull riding talent alongside some of superstars in the sport.

The tour is completely produced and operated by PBR, providing fans the highest-quality experience available. The 2023 tour will stop in 25 cities, concluding at the Velocity Tour Finals in Corpus Christi, Texas May 5-6.

The finals is considered the last event of the season, taking place just prior to the PBR World Finals each year. The top 35 riders from PWVT compete for the final five positions available at the PBR World Finals, making it the most important event on the schedule outside of the World Finals itself.

The current top five riders in the tour standings include Josh Frost of Randlett, Utah; Claudio Montanha, Jr. of Ribeirao dos Indios, Brazil; Dawson Branton of Jefferson, Ore.; Grayson Cole of New Riggold, Pa. and Mason Moody of Letcher, S.D.

The next stop for PWVT will be in Grand Forks, N.D. on April 15. Action for the PBR Grand Forks Chute Out at the Alerus Center will kick off at 5 p.m.

Rounding out the season will be stops on April 22 in Wichita, Kan.; April 28-29 in College Station, Texas at the Reed Arena and the PBR World Finals at the beginning of May.

Closing remarks

“I had a hard time last year but was blessed to come back,” said Cardozo during a winners’ circle interview with the announcer on April 1. “When you put God in front of everything, he always provides.”

“I’ve been home for a couple of years raising my family, and the good Lord has been putting me here,” said Lasley. “I’m glad to be here.”

Brittany Gunn is a corresponding writer for the Wyoming Livestock Roundup. Send comments on this article to roundup@ wylr.net.