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Our Revenue Maximizer gives us the ability to assist you in developing a marketing plan, determining which crop to plant, option strategies, government payments and insurance plans. This revolutionary software has allowed us, and subsequently our customers, to more fully understand the relationship(s) that exist between each of the categories mentioned above. The Revenue Maximizer helps us to experiment with various marketing plans and make an informed decision as to which will most positively affect the customer’s bottom line.
Let’s face it; the cost to farm an acre of cropland has risen significantly in the past few years. It is becoming increasingly important to micro manage your marketing, insurance, crop rotation and government payments—not just individually, but with respect to how each influences the other.
The table below is an example of the summary table of our Revenue Maximizer. Our intent was to make this program all encompassing. Strategic Farm Marketing works with you to input a set of marketing assumptions. Our goal is for the program to calculate as close as possible, the gross revenue of the farming operation across 110 different yield and price scenarios. Here are some of the variables the Revenue Maximizer takes into account: the level, type, and cost of crop insurance you have, claim estimates, cash forward contracts, CBOT options if purchased or sold, the cost of buying back any production shortfall, and the estimated LDP, direct and counter cyclical farm program payments at various price levels. It is important to remember the number we are attempting to show you is the net take home spendable cash flow per acre to your farming operation, after government payments are considered.
When a red dot appears, it shows you that your gross revenue is below your cost of production. The real value of this program comes when you vary the input data. For example, how would it change your gross revenue if you didn’t buy crop insurance and saved the premium? How about if you were aggressively forward contracted, bought a high level of crop insurance and also bought call options to protect against a rally? In essence, what we are trying to do is to pick the best marketing plan that fits your comfort level, gives you the best chance to profit, and has a manageable amount of risk. The agents at Strategic Farm Marketing can help you develop your marketing plan and offer suggestions on ways for you to improve it.
Link here to view a PDF of the Sample Revenue Maximizer Marketing Plan Summary
A number on a table doesn’t mean anything to most people unless we are able to compare it to something. The table below allows you to compare the Marketing Plan above to a plan where you essentially do nothing. This plan doesn’t buy crop insurance, forward contract the crop or buy options. The assumption is the production is sold off the combine in the fall and the farmer collects the same LDP, direct, and counter cyclical payments as the above example. Notice how the Marketing Plan above does very well when prices are low, yields are good, or if you have a poor crop compared to the plan below. The “Do Nothing Plan” below does very well when you have good yields and good prices (which don’t seem to come along very often).
Link here to view a PDF of the “Do Nothing” Marketing Plan
It is important to note that these values are our best estimates of what the gross revenue would be if the plans were implemented and executed per the assumptions that were made. There is no way one can “guarantee” that any account will achieve the results posted due to various unforeseen market conditions.
The table below is a sample of our profitability grid. We used the same Gross Revenue estimates from the first Marketing Plan, but we subtracted the estimated cost of production to come up with the estimated Profit (Black) or Loss per acre (Red).
Link here to view a PDF of the Sample Revenue Maximizer Profitability Grid
The table below shows the profitability grid of the “Do Nothing Plan”. Again, this plan doesn’t use crop insurance, options, or forward contract the grain. It sells the crop in the fall and takes into account LDP’s, direct and counter cyclical payments.
Link here to view a PDF of the “Do Nothing” Profitabiltiy Grid
We often will compare the best corn marketing plan we came up with to the best soybean marketing plan. We use this data to determine which crop is more profitable and ultimately if crop rotation changes should be considered.
As you can see from the above information, we are not your typical crop insurance agency. We don’t know a thing about car insurance, life insurance, or health insurance. But we do thoroughly understand grain marketing and how your crop insurance can help us be much more effective grain marketers. We like to think of ourselves as not only your crop insurance agency, but your marketing plan consultant, profitability advisor, and ultimately your partner.
“HYPOTHETICAL” PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD
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