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Executive Marketing: Developing a Marketing Plan. Scott A. Mickey. Seminar Purpose. Develop a written marketing plan based on producer’s financial needs Operating costs Cash flow requirements Planting intentions . Seminar Topics & Tools. How Healthy is your Business Fundamental Analysis

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executive marketing developing a marketing plan
Executive Marketing:Developing a Marketing Plan

Scott A. Mickey

2005 RME - Executive Marketing

seminar purpose
Seminar Purpose
  • Develop a written marketing plan based on producer’s financial needs
    • Operating costs
    • Cash flow requirements
    • Planting intentions

2005 RME - Executive Marketing

seminar topics tools
Seminar Topics & Tools
  • How Healthy is your Business
  • Fundamental Analysis
  • Comparing Crop Insurance Products
  • Marketing Simulation Game
  • Target Price Analysis
  • Putting the Plan on Paper
  • Quarterly Updates

2005 RME - Executive Marketing

how healthy is your business
How Healthy is Your Business
  • Assess the financial condition of the business
  • Recent Balance Sheet

2005 RME - Executive Marketing

assessing financial position
Assessing Financial Position
  • What is the ratio telling us?
  • How has it changed from last year?
  • Will it impact marketing decisions?

2005 RME - Executive Marketing

fundamental analysis
Fundamental Analysis
  • Where prices may go
  • When

2005 RME - Executive Marketing

fundamental analysis8
Fundamental Analysis
  • Project Ending Stocks
  • Estimate US average cash price
  • Add average US basis to cash price
  • Determines expected Futures price
  • Adjust to HARVEST futures price
  • Evaluate years with similar ending stocks

2005 RME - Executive Marketing

crop insurance
Crop Insurance
  • Understand available products
    • Production guarantees
    • Revenue guarantees
  • Use CRC for Market Trades

2005 RME - Executive Marketing

crop insurance15
Crop Insurance -
  • Comments
  • Is CRC a better way to go?
  • What about the price in between the base period and harvest period?

2005 RME - Executive Marketing

coulda
Coulda

2005 RME - Executive Marketing

marketing simulation game
Marketing Simulation Game
  • Dr. Art Barnaby’s corn trading game
    • S/D reports
    • Futures / Options / Cash
    • Crop Insurance
  • Review of price enhancement strategies

2005 RME - Executive Marketing

target price analysis
Target Price Analysis
  • Discover “successful” prices
    • Target = OP + Extra
    • B/E = OP
    • Cash Flow = OP - WC
  • Use producer’s actual crop budgets

2005 RME - Executive Marketing

setting commodity target prices
Setting Commodity Target Prices
  • Step 1--Determine operating profit requirements
  • Interest
    • + Family living & taxes
    • + Principal payments
    • = MINIMUM OPERATING PROFIT
    • + Allowance for new assets & uncertainty
    • = OPERATING PROFIT GOAL

2005 RME - Executive Marketing

floid
FLOID

Family Living & taxes

Operating expenses

Interest

Debt (principal)

2005 RME - Executive Marketing

calculate operating profit
Calculate Operating Profit

2005 RME - Executive Marketing

setting commodity target prices22
Setting Commodity Target Prices

Step 2--Calculate TARGET prices.

* Covers FLOID + Uncertainty

Operating Cost

+ Operating Profit Goal

= Calculated Gross Revenue

- Non-Crop Revenue

= Crop Revenue Required

/ Expected Yield

= TARGET PRICE

2005 RME - Executive Marketing

calculate target price
Calculate Target Price

2005 RME - Executive Marketing

putting the plan on paper
Putting the Plan on Paper
  • When
  • How
  • What
  • Quarterly Updates

2005 RME - Executive Marketing

executive marketing update acreage report 6 30 04
Executive Marketing: UpdateAcreage Report 6/30/04
  • General Comments
  • These comments apply to the July/August time period.
  • The FLOID price covers Family Living, Operating expenses, Interest and Debt. The FLOID price results in no change in net worth.
  • The “Duck” price covers all of “FLOID” plus a 25% cushion. A Duck price increases net worth.
  • Assess your “FLOID + Duck” price relative to market. If you can achieve this price level, use futures or cash forward contracts.
  • Assess your “FLOID” or breakeven price relative to market. Try to achieve this price level using put options. This will protect family living and debt service needs while leaving the upside open.
  • Corn – CZ04
  • Comments:
  • Dec 04 & 05 are both in top 1/3 of historical prices.
  • Historical high yields needed on increased acres to maintain current Ending Stocks.
  • A decrease in yield could be explosive.
  • Chart gaps DOWNSIDE @ 2.58, UPSIDE @ 2.72, 3.05
  • Actions:
  • If no crop is priced, get to 50% priced now.
  • Price in September or December based on your storage situation and risk tolerance.

2005 RME - Executive Marketing

john polkinghorne physicist anglican priest and author of the god of hope and the end of the world

Hope is much more than a mood. It involves a commitment to action…What we hope for should be what we are prepared to work for and so bring about, as far as the power lies in us.

John Polkinghorne, physicist, Anglican priest and author of The God of Hope and the End of the World

thank you
Thank You!

Scott Mickey

smickey@clemson.edu

PO Box 237

Sumter, SC 29151

803 775-4580

800 881-7518 fax

2005 RME - Executive Marketing