Whether you price and deliver using a commodity exchange, or whether you negotiate contracts with retailers or you sell farm products directly to consumers, the price you go to market at is always crucial to success in agriculture.
Increasingly, though, today’s farmers are applying their management skills to the job. How can they set themselves up for better results?
There are a multitude of marketing strategies, tools and services available and certainly more than one right way to use them.
What these new farmers are finding, however, is that there are also strategic options at the heart of every farm’s marketing plan — whether they get called “strategic” or not — and they can make huge differences, even when applied across sectors and geographies.
To put it to the test, Country Guide talked to three regional winners from Canada’s Outstanding Young Farmers program, which aims to recognize excellent farm operators between the ages of 18 and 39. We asked them, “What are you doing to up your marketing game?” Here’s what we learned.
Jason and Laura Kehler, Kehler Farms Ltd., Carman, Man., 2016 Manitoba Outstanding Young Farmers
Jason Kehler had used forward contracts for many years, but as the business grew, its combined accounting, marketing and production needs became overwhelming. He and Laura were burning the candle at both ends, and they knew they had to make a change.
In 2019, Kehler recruited Trevor Wiens to join the team as a chief financial officer and director of grain marketing, and he feels adding the role has only improved the business.
“I stepped back from the marketing role and Trevor now manages it. He is doing a better job because he’s a numbers guy who can devote more time to it and really take it to another level,” Kehler says.
Where Kehler hadn’t been comfortable with futures and options trading but also didn’t have time to learn more about them, Weins has been able to dig in and learn how to use these tools to improve their results.
Today, Kehler and Wiens meet on a weekly basis to discuss what’s going on in the markets and to finalize marketing decisions.
“I would have to say that one of our biggest faults as farmers is thinking we have to do everything ourselves,” Kehler says. “I’ve learned that I have to trust people, put them where they are strong and give them the tools to be successful. Our farm is much better off with good people around than it would be with me trying to do everything myself.”
Kehler had learned about marketing grain the same way he’d learned how to grow it — starting at a young age, he watched and worked alongside his father and grandfather.
When he became a partner in the business, Kehler Farms Ltd., the need to make marketing decisions was limited because grain was sold through the Canadian Wheat Board (CWB) and potatoes were grown on contract.
“Starting to market our own grain added a different dynamic to the business but it’s been a vast improvement,” Kehler says about the CWB being eliminated 10 years ago. “We’ve never looked back.”
Now, the Kehlers grow potatoes, corn, edible beans, wheat, oats and ryegrass on 6,700 acres in southern Manitoba. They negotiate a fixed-price potato production contract each year but market the other crops on an ongoing basis.
The marketing plan is strategically focused on managing storage, risk and cash flow. Investing in increased storage capacity over time has made a significant difference.
“Dad liked to have the bare minimum amount of storage and I found that forced us to make price decisions that we wouldn’t have had to make otherwise,” Kehler says. “Now we build bins every year and my goal is to have enough storage for a good crop so that I can sit back and make good decisions.”
A Call Away
Jordan and Jennifer Lindgren, Lindgren Farms Ltd., Norquay, Sask., 2018 Saskatchewan Outstanding Young Farmers
Like the Kehlers, Jordan Lindgren also made the decision to seek external marketing expertise to improve his business. But instead of onboarding a full-time employee, he chose to hire a grain marketing firm and start working with a market advisor.
Lindgren, who farms 14,000 acres of canola, wheat, peas and oats with Jennifer and their four young children, was previously making most of the marketing decisions himself.
He graduated from the University of Saskatchewan with a diploma in agriculture before joining his uncle and father in the farm business, purchasing their shares when they retired in 2014 and 2017.
In the beginning, it was a combination of learnings from university and lessons from the previous generation that shaped Lindgren’s marketing plan. “After a few years, I got a feeling for when we need cash flow, what we have for storage, and when we have employees to move grain,” he says.
Lindgren was using a variety of tools to manage risk, including a trading account for futures and options contracts. To stay informed, he attended market outlook meetings hosted by a local retailer and subscribed to newsletters from a few market analysts.
But as the business grew, so did management responsibilities. Lindgren decided it was time to work with someone who is solely focused on commodity markets.
The grain marketing firm he chose provides daily market reports by email but the service he values most is one-on-one consulting with an advisor.
“It’s constant communication,” Lindgren explains. “We talk every other day by phone to discuss what’s happening and what they’re expecting to see in the market. They’re constantly watching and analyzing the data, which is what farmers don’t have time to do.”
While hiring a market advisor doesn’t remove all of the risk, Lindgren has learned that it can take a significant weight off his shoulders. The stress of trying to guess where the market is going, making sure grain is being priced and keeping track of when it needs to be delivered has been lifted, he says.
The advisor uses real costs of production and other cash-flow information in order to make customized recommendations, which Lindgren sees as an added benefit because it makes farmers take a sharper look at their profitability and make more educated marketing decisions.
Looking ahead, he plans to continue working with an advisor long-term. He finds the service to be inexpensive relative to the potential return.
“Hiring a market advisor is a cheap way to protect your bottom line,” Lindgren now thinks. “Nobody can pick the high all the time but they have a pretty good idea of what’s happening in the market. They are certainly making me far more money than they are costing me.”
A Sharper Focus
Gurpreet Lidder, Lidder Produce Ltd., Keremeos, B.C., 2022 B.C./Yukon Outstanding Young Farmer
While the Kehlers and Lindgrens have found success by involving more people in their marketing efforts, the opposite is true for Gurpreet Lidder at Lidder Produce Ltd.
Lidder is a second-generation fruit farmer from the Similkameen Valley, who primarily grows apples and cherries, along with some peaches, pears and nectarines.
When he graduated from the University of British Columbia and joined the family business, his parents were selling their produce at a roadside stand and through a local co-op. He soon steered the company in a different direction, breaking away from the co-op and marketing directly to small retail chains in the Lower Mainland.
After a period of steady growth, Lidder further executed his vertical integration strategy by building a packing facility in 2018. The expansion opened the doors for him to market to larger commercial retailers and start exporting.
“Now we can take our product, pack it and sell it,” he says. “We’ve been successful in eliminating the middlemen, like brokers and wholesalers, and going directly to retailers.”
A weekly request-for-quotation (RFQ) process is used to sell Lidder’s fruit to Loblaws and Sobeys. (Annual fixed price contracts are a thing of the past. Not unlike other farm commodities, environmental factors can significantly have an impact on market prices.)
With smaller retailers, such as Langley Farm Market which has six metro Vancouver locations, Lidder is usually pricing contracts month by month.
But Lidder remains focused on volume of product, not volume of retailers.
“I’ve always learned that 80 per cent of business is repeat business,” he explains. “I focus on less than 10 retail customers, trying to figure out their needs and how to better cater to them. I think as long as we continue to do that, we will continue to earn their business.”
Lidder also values long-term relationships over short-term gains. He does not overcharge retailers when there is a product shortage and in return, he has found that they will be fair to him when there is excess on the market.
While the farm has grown to 240 acres and the distribution channels have changed over time, the roadside stand where Lidder and his siblings grew up working still plays an important role.
Primarily due to location, the stand attracts passionate foodies who drive hours specifically to purchase excellent quality fruit.
Lidder uses them as a test market and has learned he can accurately predict consumer trends based on their adoption of new varieties.
Long term, his goal is to continue growing and keep the focus on quality.
“If you grow high-quality fruit, you can differentiate yourself and you’ll always get paid well,” Lidder says. “Too many people focus on packaging or marketing strategies and forget that product quality is most important.”