As is tradition, I like to wrap up the year with my 3 biggest learnings from the season.
- Farming doesn’t have a marketing problem
- Decisions made on facts, consistently trump those made on emotion
- Yield is king
Here’s a closer look at number 2
I’ve said for years that we make better decisions if we bounce the idea off someone else first. I’m pretty sure the research backs that up too. But this year I’ve learnt a lot more about who, or maybe I should say ‘what’ that other party is that has its influence.
Our hedging model was built with this in mind. It was an attempt to systematise the process of whether or not we sell grain today, and if so, how much. To actually put rational behind decisions, rather than go with what feels right on the day.
Judges in bail hearings are making poorer decisions than computer algorithms determined by the very same judges prior to entering the courthouse where emotions often take over.
We make better investment decisions if we stick to a well-crafted plan, rather than respond to news headlines.
And we make better grain marketing decisions if we have defined the outcomes of what will make a successful marketing program for the season.
This line of work sees plenty of people come and go because their strategy for marketing is either non-existent, or it changes every five minutes.
Hence, this year you’ll see more systematic advice, improved internal documentation of client discussions, and hopefully, a better end of season result. The point being, we make better decisions when we focus on the facts, and not get caught in the noise and emotion at play in the market.
I’ve tweaked the model this year after reading The Cost of Free Parking, which discusses optimal stopping theory and elements of game theory. In grain marketing, we’ve got ample opportunities to sell, but it’s about making the most optimal decisions we can to pick the right opportunities for us.