RM 1-2 (L-5358)
Niche markets are small, specialized markets for goods or services. Agricultural producers have many opportunities for niche marketing, and this strategy can contribute to the profitability of a firm. Examples of niche markets are included in this publication, along with ideas for getting started.
Retained ownership, or market integration, involves carrying over a production activity into the next phase of preparation for the marketplace. This publication discusses the advantages associated with this production and marketing strategy.
Replacement management strategy involves comparing the values of breeding stock you currently own with the value of potential replacements, and then choosing the investment with the highest expected worth. This publication discusses the application of capital budgeting to the replacement decision for breeding stock.
About one-third of the total value of U.S. agricultural production is produced under contract arrangements. This publication explains marketing and production contracts, and gives specific detail about contracts in swine production and in the broiler industry.
Adding value to agricultural products, and marketing those products effectively, can significantly increase farm income. This publication explains how to design a value-added product based on consumer preferences, and how to build a business plan for such a product.
This leaflet focuses on the three kinds of beef carcass alliances-breed association-sponsored, commercial and natural/implant-free. Each is intended to help producers make their operations more profitable. In the long run, producers are advised to maintain flexibility in their herds and learn all they can about different pricing structures.
There are several value-based fed cattle pricing systems, including formula pricing, price grids and alliances. This publication describes the different cattle pricing methods and helps you decide which is best for you.
This publication is an introduction to futures markets. It describes the history of the markets, defines terminology, and describes how to use features effectively in farm marketing programs.
Options give the agricultural industry a flexible pricing tool to assist in price risk management. This publication defines options, and gives a brief introduction to this tool.
Understanding trends and/or tendencies in basis movement can help a producer make good decisions for minimizing basis risk. This publication discusses basis, its variability, how to track it, and how to manage basis risk.
Knowledge of historical basis patterns can be useful when estimating expected sale or purchase prices at the conclusion of a futures or options hedge, when evaluating a current cash market quote, and when forecasting cash prices. This publication explains how livestock basis is computed, outlines an approach to developing a history of local basis levels, and discusses how historical basis data can be used to forecast basis.
Understanding crop seasonality can improve a producer’s marketing skills and options. The causes of seasonality and its effects on price changes are discussed.
For many crops, seasonality is often the dominant factor influencing prices within a single production period. This publication explains how to construct and use several kinds of seasonal indexes for crop marketing information.
Seasonal price movements can be measured and used to help in marketing livestock. This publication includes 10-year seasonal price indexes for several livestock categories, and explains how to interpret and use the information.
Producers who wish to trade futures or options contracts will need to work with a broker. These tips can help in selecting a broker and in forging a good working relationship.
Participants who have superior information hold a distinct marketing advantage over those who do not have the information. This publication lists various sources of marketing and production information and where to obtain them.
Put options are a pricing tool with considerable flexibility for managing price risk. This publication discusses how put options work, how to use them, and some put option basics.
A call option is a pricing tool that helps producers manage the price risks associated with farm and ranch inputs. This publication offers a thorough explanation of the way call options work. It includes various strategies producers might use, and illustrations of those strategies.
This publication defines a selling (short) hedge and gives case examples on how to use a selling hedge.
This publication defines a buying (long) hedge and gives case examples on how to use a buying hedge.
Minimum price contracts are one of many tools a marketer may use to better manage price and production risk while trying to achieve financial goals and objectives. This publication discusses the different advantages and disadvantages involved with this marketing strategy, and when it can be used.
The window strategy is one of several marketing strategies that use futures and options to establish a floor price and allow for upside price potential. This publication discusses how it works, when to use it, and gives an example of a window strategy.
The bear put spread is an option spread that combines buying and selling put options of the same contract month. The advantages and disadvantages of this marketing tool are discussed.
The bull call spread can be used to hedge against or to benefit from a rising market. The user buys a call option at a particular strike price and sells a call option at a higher strike price. Margin requirements and advantages and disadvantages of this strategy are explained.
Agricultural producers use put options to protect themselves against declining prices. The technique of “rolling up” a put option, explained in this publication, allows the producer to raise the minimum expected selling price of a put option. Detailed examples are given for using this marketing method.
Technical analysis of futures markets can be complex, but this publication explains fairly simple methods of using bar charts to predict price trends. Understanding resistance and support planes, chart gaps and other signals are discussed.
Technical analysis uses past price information to project future trends. In this publication, crop and livestock marketers will learn how to use technical analysis in their risk management programs.
There are many factors that may affect option premium values. This publication list these factors and gives brief explanations of them.
The marketing time frame for crops can be divided into three parts–pre-harvest, harvest and post-harvest. This publication focuses on a few of the more common post-harvest marketing strategies using forward contracts, storage, futures contracts, options, and various combinations of these tools.
This publication defines many of the marketing terms producers may encounter.
In order to use futures and options one must understand how such contracts are specified. This publication features complete descriptions of the contract specifications for both futures and options as they are used for agricultural commodities.
A marketing club is a group of people who usually meet once or twice a month with the common goal of increasing their knowledge of marketing and other risk management concepts. This publication offers suggestions for starting successful marketing clubs.
Basic Formula Price (BFP) milk futures and options can be used to hedge, or lock in, milk prices in order to manage milk price fluctuations. This publication offers information on futures contracts, basis, cash settlement, and margin call. There also is a hedging example.
USDA publishes crop supply and demand estimates for each month. Producers, merchandisers, processors, traders and other market participants rely on this information when making their buying and selling decisions. This leaflet explains how USDA makes its estimates and how such production forecasts can be used.
Grain contracts can help farmers manage the increasing risks of production and the price volatility of the market. This publication explains grain contracts and how to use them wisely as a risk management tool.
The milk futures and options market enables producers and processors to manage price risk. This publication explains hedging, margin accounts, basis and how to track it, and other fundamentals of the futures and options market.
This publication discusses the federal orders that govern the marketing of milk. The production location and form of the milk product affect the way it is priced. The different classes of milk and their prices are explained in detail.
Cheese prices are derived from the USDA Agricultural Marketing Service Market News, the National Agricultural Statistics Service, and the Chicago Mercantile Exchange. This publication explains the process of cheese pricing. It includes information on hauling rates and freight differentials (4 pp., 1 table)
A business plan is a road map for success. It describes a firm’s organizational structure, products and services, objectives, financial and marketing plans, strengths and weaknesses. This publication guides business owners in developing plans that can help them make decisions and sell the feasibility of their businesses to bankers and other investors.
Developing a good marketing plan will help you identify and quantify costs, set price goals, determine potential price outlook, examine production and price risk, and develop a strategy for marketing your crop. This publication describes the importance of a written plan, the components of a marketing plan, and information on evaluating the plan.
There are a number of ways farm and ranch businesses can be structured, including partnerships, corporations, limited liability companies, and others. This publication explains how the structure of a business affects estate planning, management, taxes and other issues.
Enterprise budgets can help farmers and ranchers make better decisions about what products to produce and how to produce them economically. This publication tells how to create and use enterprise budgets, and includes a helpful example.
Strategic planning is crucial to the success of any business. This publication explains the planning process, from establishing the mission, to setting goals, to developing a business plan.
SPA is a tool for determining the production and financial performance of the individual cow-calf enterprise. It allows producers to compare production systems, identify areas that need to be changed, and measure progress toward meeting business objectives. This publication details the information requirements of SPA and explains how producers can gather that information.
A major component of a marketing plan is an estimate of the price necessary to cover all costs based on expected yields (break-even price). BudPro, a budget projection software offered by the extension service, is designed to help agricultural producers with this estimation. This publication explains how to use BudPro, outlines the minimum hardware requirements, and gives information on how to order the software.
Without budgeting, family living expenses may exceed the available income and jeopardize the overall financial goals of the farm and family. This publication offers information on developing a family budget and provides an example of a monthly average family living budget.
Various management factors, including specific practices and the persistence of those practices over time, can have a big influence on farm profitability. Some of those factors are managing for high yield or low production cost, as well as adoption of technology. Producers can use the information in this publication to help with allocating resources.
Management is getting things done with the finances, people, equipment and land resources available. A good manager invests time in careful planning, which includes developing a vision and a mission statement to guide the business enterprise.
This publication discusses several management functions, including organizing, staffing and directing, and controlling. Suggested activities help managers learn how to implement these functions in their farm and ranch businesses.
Multiple Peril Crop Insurance (MPCI) protects against low yields, poor quality, and other risks. All aspects of MPCI are described, including reporting requirements for the producer.
Crop Revenue Coverage guarantees a stated amount of revenue based on commodity futures prices. This publication explains how CRC works and gives examples based on different harvest price scenarios.
Group Risk Plan Insurance helps producers manage risk by insuring them against widespread loss of production. The insurance is described in detail, and examples are given for various yields and prices.
This publication is a glossary of terms used by the crop insurance industry. There are definitions for terms used in crop insurance documents, and for terms pertaining to coverage levels, farming, reports, units, and parties to contracts.
Equipment leasing has gained favor with farmers and ranchers in recent years. This publication discusses how to determine lease cost, analyzes lease vs. purchase, and gives an analysis illustration.
A balance sheet is a statement of the financial condition of a business at a specific time. This publication briefly discusses the balance sheet, its uses, and how to evaluate it.
An income statement measures the success of a business, in terms of net income or loss, for a period of time. An income statement of a farm business includes items in seven major categories. This publication describes each of these categories and gives a sample income statement.
A cash flow statement is simply a record of the dollars coming in and the dollars going out of a business. This publication briefly discusses cash flow statements and gives a cash flow projection for operating loan determination.
Credit is a requirement for farming and ranching enterprises. In today’s environment, lending institutions are requiring more and better information about enterprises before credit will be extended. This is a guide to the documentation you will need for a loan package.
Those who succeed will manage their operations as farm/ranch businesses, with more emphasis on record keeping, planning, profitability analysis, and repayment-based financing, and with better production and business monitoring and controls. This publication explains ways to manage the farm/ranch business.
This publication lists and defines many of the financial and economic terms associated with financial statements and farm business management.
Many crop producers rely heavily on rented land in their farming operations. This publication describes cash rent leases and compares them to crop share arrangements.
Many crop producers rely heavily on rented land in their farming operations. With this publication, they can learn more about determining crop shares and the principles of crop share leases.
Purchasing land can be a difficult process for agricultural producers. Determining the value of land is one concern. This publication describes the primary determinants of land value, focusing on land rent and a related measure, rent-to-value. The maximum bid model can help with decisions about buying land.
This publication explains the differences between cash and accrual accounting, and suggests how farmers and ranchers can get the best of both accounting systems. There are sample income statements and a table to illustrate the adjustment of cash basis records to approximate accrual basis records.
The 1996 Farm Bill may be the greatest change in farm policy since the 1930s. This publication discusses the potential impacts of these provisions on farmers’ price and income risk exposure.
This publication reviews the history of farm programs in the U.S., and discusses the options that will be debated by Congress when the current farm bill expires at the end of 2002
International markets are important for many U.S. farm products and have a major impact on U.S. agriculture. This publication discusses the causes of import change, the export product mix, major markets, and potential markets for the future.
This publication provides an overview of the globalization of U.S. agriculture, with special emphasis on implications for risk management. To be successful in a rapidly changing global environment, farmers will need a clear understanding of risk and how to manage it.
Exchange rates, interest rates, government spending, and taxation are all key macroeconomic forces that influence the prosperity of U.S. agriculture. Macroeconomic policy changes are often difficult to predict, but an understanding of their impacts will help producers anticipate the consequences of alternative policies and take appropriate actions.
As U.S. government support to agriculture declines, understanding the economic impacts of agricultural trade and how markets and competition are affected will take on added importance for farmers, agribusinesses, policy makers, and agricultural leaders. This publication discusses why there is international trade, the fallacy of lost jobs, and the perception of America’s lost industrial competitiveness.
The use of trade agreements to achieve both domestic and international trade policy objectives is increasing. This may cause either more market access and rising exports, or more import competition and lower prices. This publication provides a long-term view of U.S.-Mexico trade and the implications of the North American Free Trade Agreement (NAFTA).
The United States attempts to handle environmental problems primarily by regulating the use of natural resources. In many ways this affects farmers and ranchers. This publication discusses the various federal regulatory approaches that have been implemented for air, water and land.
Income tax planning and management involves being aware of tax alternatives and knowing how to integrate them with other management data to accomplish the taxpayer’s objectives. This publication discusses various alternatives for tax planning.
The federal estate tax is an excise tax levied on the privilege of transferring property at death. This publication discusses the important issues relevant to understanding estate taxes such as: when and how property is valued for federal estate tax purposes; and what property is included in the decedent’s gross estate.
Cash forward grain contracts are subject to some aspects of commercial law that have developed as a result of the increased complexity of business transactions and the conduct of those transactions across state lines. This publication describes such legal issues.
This publication is devoted to a discussion of various alternative strategies for dealing with financial stress. It should be clear that there are no simple answers, nor are there any “quick fixes.” Each producer and each operation is unique, and only the producer will be able to decide which alternative, or combination of alternatives, will be effective in addressing the financial stress in his operation. However, as the producer goes through the process of analyzing his alternatives, it is imperative that he seek competent legal and tax advice from his attorney and accountant.
People–human capital–are an important resource in making a farm or ranch business more competitive in today’s business environment. This publication summarizes ideas about modern personnel management that illustrate ways to attain a farm or ranch’s business goals through its people.
Successful managers know that recruiting and training key personnel is critical to the health of any business. This publication discusses the five steps to recruiting and selecting the best employees.
Employee compensation is important to successful employee recruitment, retention, motivation, performance, feedback and satisfaction. This publication explains the many alternatives employers have for creating compensation packages.