C magazine

Reducing risk and stress: Building strong marketing strategy

From left, Kevin, Steve and Neil Blume have found value in building a relationship with a marketing professional.

From left, Kevin, Steve and Neil Blume have found value in building a relationship with a marketing professional.

Aug 28, 2020

Focusing on individual strengths is part of the Blume family’s farming philosophy. Brothers Kevin and Steve and their father, Neil, communicate daily and share the labor but often work independently on their corn, soybean and sugarbeet farm near Herman, Minn. “We each have our main areas of responsibility,” says Kevin. “Steve likes to focus on planting and harvest. I do most of the spraying and help with harvest.”

Kevin also runs point on grain marketing, taking over the job from his father eight years ago. “I have a good knowledge of marketing basics, but it’s something that I never feel like I have enough time to master. That’s one of the biggest reasons we use a marketing consultant and why my dad started working with Kent 20 years ago.”

Kent Beadle, director of producer brokerage for CHS Hedging and manager of AgSurionSM Risk Consulting, has 34 years of marketing and risk management experience with CHS. For the Blumes, he’s a familiar and valued resource. “He feels like a friend,” says Neil. “No one outside the family knows our operation as well as he does.”

The Blumes agree the most important factor in choosing a marketing consultant is trust. “Kent knows us, our operation’s history and our goals, and we trust him, which is huge,” says Kevin. “We know he’s got our farm’s best interests at heart.”

Setting Goals

In the current economic climate, the main goal of many farming operations is simply to remain viable. The Blumes are no different. “Steve and I each have three young sons and we’d like them to have the option of continuing to run this farm someday,” says Kevin. 

To accomplish that, the Blumes regularly revisit marketing goals and strategies, updating the management plan they’ve crafted with Beadle’s help. A team of experienced risk consultants, including Beadle, four other CHS Hedging staff members and 20 independent associates, work under the AgSurion Risk Consulting banner. CHS Hedging acquired full ownership of the former Russell Consulting in 2018.

“The name has changed, but we offer the same services, resources and commitment to our grower-customers,” says Beadle. “One of the first things we do with each client is to complete a detailed financial analysis of the operation to create a benchmark that we can compare future results against. We also compare the operation’s performance with the averages of our broader client group to provide a bigger picture of how the operation is doing and to help identify areas to improve.”  

Most growers focus on commodity prices and dollars per bushel or per head and tend to overlook efficiency factors, he notes. “We try to shift the focus to understanding gross dollars per acre or head needed to cover all costs, including operator draw and desired profit. There is often more than one way to get to your objective.”

In the current agricultural and global trade environments, it’s also important to consider available programs, such as the Price Loss Coverage program, adds Beadle. “The trade war has had an enormous impact on commodity markets, and the government support payments really helped most growers. It’s important to make sure those payments are accounted for, since they play a role in goal-setting.”

Easing Fear

Like many farmers, one of Kevin Blume’s biggest fears is selling at the wrong time. He says working closely with Beadle has made him more confident in making decisions. “It helps to have a strategy — when the price hits a certain level, we sell a percentage of our crop.”
Marketing decisions are often hard, says Beadle. “Having a plan, along with up-to-date information and analysis, helps take emotion out of the process. That’s what our service is all about.”

Having regular conversations with a trusted consultant is really valuable, Kevin says. “I talk with Kent almost every week — either I call him with a question or he calls me with an idea. He has helped us do a better job of hedging, and we’re pricing some of our crop farther out than we used to.”

The other side of the profit equation is trying to cut costs. “We’ve learned it doesn’t pay to buy cheap seed or cut back on fertilizer rates,” says Kevin. Instead they’ve invested in more precision ag equipment for variable-rate planting and spraying. “We’re keeping equipment like tillage tools longer, fixing them rather than replacing them.”

Would the Blumes ever eliminate the cost of their consulting service? “The three of us did talk about it once, but none of us are marketing experts,” says Kevin. “History has shown we’re much better off hiring the services of someone who is an expert.”

Check out the full C magazine with this article and more.

This material has been prepared by a sales or trading employee of CHS Hedging, LLC, and should be considered a solicitation. There is a risk of loss when trading commodity futures and options.