Concerns about price-risk management should rank near the top of every cattle producer’s priority list. Price-risk strategies include developing a marketing plan and becoming familiar with price-risk alternatives. A marketing plan outlines all foreseeable contingencies that can surface in selling a product. It should clearly define objectives and actions to be taken when these objectives are met. A marketing plan consists of these five steps:
- Collect information. This includes all personal and enterprise financial information along with marketing information.
- Establish price goals. Price goals should be based on production costs, financial information and your personal risk tolerance. The goals need to take into account the prevailing market conditions.
- Develop strategies to achieve goals. Consider all possibilities. Two strategies to use include cash marketing and forward pricing.
- Execute your strategies. This step is often the one that destroys a marketing plan. It also may be referred to as "pulling the trigger."
- Evaluate the performance of past and current marketing strategies relative to your goals.
While you’re the one who has to provide the information and answers, you don’t have to do it alone. Private consultants, extension specialists and agriculture economists can help you crystallize your ideas and help set your plan into motion.