I believe every dollar spent in a business should be spent on solving a problem.
In most industries, to be a successful business they must dedicate a lot of attention to their marketing efforts. Woolworths for example spend 1.25% of gross revenue just on advertising, and another 6.1% on other marketing activities. Retail business are up to 17%. Toyota 9.3%. The average marketing spend in B2B companies is 6.9% of total revenue. But farming is different. Buyers are actively trying to buy your product. You probably spend 4 or 5% on your livestock marketing (1.5% of that is trade credit insurance though), and you’re paying us around 0.3% for your grain marketing *cough*.
The point of this isn’t about being a pity party, it’s to share a recognition I’ve had this year about farming and how this businesses services are best utilised.
Farming businesses, unlike most businesses, doesn’t have a marketing problem, it has a resource problem. With a bit more rain we would have had bigger crops. With a bit more time/labour we could have got things done more timely and grown bigger crops. With a bigger airseeder the crop might have gone in at a better time. A big part of the service offered here is to solve the problem of time and effort spent negotiating the sale and making sure contracts are filled correctly, the other is to solve the risk management problem to avoid selling your product at an unprofitable price.
Someone told me a few weeks ago that their consultant had suggested they grow less barley next year because they might struggle to sell it if China implement recourse on the anti-dumping and countervailing investigations. Umm, seriously?
We don’t have a marketing problem, nor are we going to. We’ve got plenty of buyers for your grain. Don’t let people over-complicate your marketing and alter your production, particularly if it’s currently your most profitable production.
I get frustrated with buyers offering more complicated contracts for no added benefit. Complex pool products with massive margins for the pool operator and fluffy promises for the farmer.
I spend about 1 hour a year looking at what Farmgate Advisory’s competition is doing, and amazed to see the direction some are heading by following buyers leads by taking ownership of grain to manage complex trade strategies, pools, tax minimisation strategies, and freight management.
So, my number 1 biggest learning of 2019, focus on making grain marketing more simple, and more profitable for my clients. This means don’t bombard growers with S & D data, trade statistics, or phone calls without a purpose. Everything that goes out of this office has to pass through the ‘does it make farmers marketing more profitable, and/or less stressful and time-consuming’ filter.
I’ve spent a lot of time and money over the last few weeks improving the systems for managing clients, with lots more work to do through January. While you probably won’t notice many drastic changes, I’m confident you’ll benefit from a much better service in the seasons ahead.
This season, we’re also ceasing any casual transactional brokerage for non-clients just wanting a few loads of grain sold. I’ve spent a lot of effort on building strong relationships with buyers and endusers, which only full paying clients can benefit from now.
We don’t broker freight anymore, and instead encourage strong relationships with your carrier, because that’s going to make your grain marketing a lot simpler in the long run.
We spend a truckload of money on information every year. By far the best value is a Mecardo subscription for $299. If you want more information than we’re providing, I highly recommend getting one, they can provide it cheaper than we can.
Everything has a cost, including attention for reading these newsletters. I’ll be trying to keep communication under 500 words going forward. This year, you can expect more customised information, sent just to you to contribute to a discussion point we might be having. Whatsapp has been a gamechanger here for this.
Please don’t take this as a rant, it’s been a big learning for the last 18months or so. Focus on what you do, and keep doing it better. I’m disappointed to see the direction CBH has gone by diversifying throughout the entire industry, and I’m making sure we learn from this.
Thank you once again for the support this year, and here’s to a productive and efficient 2020.