Farming is a seasonal business. Therefore, consider using your time off during the winter to improve your business plan so you can maximize your grain profits. With a solid plan, you don’t have to wonder whether to store your harvested grain in the fall or immediately sell and call grain transport companies to deliver your goods.
Stay up to date on your industry. Agriculture news sources and crop reports can be used to prepare for your upcoming season and harvest. For example, they may discuss droughts in your area or throughout the nation. They may also discuss current and expected future demand. You may also learn new strategies to increase your yield.
Your business and market plan should discuss how you will track grain prices throughout the year. Tracking grain prices during the late summer and fall, when you are harvesting, will require more effort because prices fluctuate significantly. However, your plan should discuss your expectations and target sell price so you can act quickly and decisively when the market hits your price.
Because storage cuts into your profits, it is important to determine the maximum you want to spend on storage costs each year. Then, you can set your target grain sale date based on this calculation.
If you own storage bins, your storage costs may be minimal or zero. However, if you have to rent storage space, you will pay per bushel per month. If you start your marketing plan early, you can call around and get storage rates and conditions from different facilities so you can choose the lowest cost. This will also allow you to accurately calculate your storage costs and how long you can store your grain without losing money.
Several other strategies can be used to increase your profits and decrease your risk, such as forward contracts, which are used by farmers to sell pre-harvested grain at a high purchase price. The assumption is that the grain price may decrease prior to harvest, so you are locking in a higher price before the market price falls. However, this is risky because the price could climb even higher or you may sell more grain than you harvest. During the off-season, consider learning other new strategies that may supplement or secure your profits.
The best way to avoid making emotional decisions is to develop and follow a detailed business and market plan. This plan, which should be reevaluated each year, will help you maximize your profit, minimize your risk and direct you through your harvest and grain sales.