Assessment Tool Helps Farmers Make Disciplined Marketing Decisions
"Profiling" is a well-known concept today because of the popularity and proliferation of detective shows. But finding serial killers isn't the only thing this psychological assessment is used for. Now farmers are finding that such assessments can shed light on their own strengths or weaknesses and enable them to improve performance by changing habits or hiring outside help to bolster weak points.
Anne and Don Borgschatz, dairy producers in Plainview, Minn., took a 20-minute Marketing Assessment Profile designed by Scott Stewart of Stewart-Peterson Advisory Group in 2008. They were convinced they needed to learn to better manage profits by protecting both input prices and milk sales. "I can't say we were surprised by the results -- we already knew we didn't know much about marketing," Anne told DTN. "I do think the MAP gave our adviser a better idea where we stood in our need for education." She noted that they had already taken a risk attitude assessment relating to other investments.
The MAP idea evolved from the Theory of Constraints, which had its roots in Liebig's Law, which states that plant growth is not controlled by total resources available, but by its scarcest resource -- the limiting factor, said Stewart. The MAP includes questions to identify any limitations in five areas: marketing knowledge, risk tolerance, time available for marketing, experience level and your personality type (how you react to price moves). You are rated on a numbered scale to help identify where you have room for improvement.
"You can have all the knowledge in the world, but if all your time is spent in the tractor, not paying attention to marketing, then it won't matter what you know -- and it would be a waste of time to try to learn more when time is your limiting factor," Stewart said. Or you might understand how to hedge, but if your personality can't handle a margin call, it won't work for you.
After taking the MAP, Nate Kitzinger, who farms in Titonka, Iowa, said that he realized the importance of having someone watching his interests in the grain market, especially during planting. "We make decisions in advance, then they remind me at the right time." Likewise, Anne Borgschatz likes to receive a phone call when a price trigger has been hit or a sales recommendation goes out.
"From our work with producers, we've found that uncertainty leads producers to freeze and do nothing, or to make costly mistakes," said Stewart. "To be of any help, we needed to help people break down the steps to improvement."
Personality and psychology really do play into marketing, according to Stewart. "The personality traits that make a farmer a good farmer are often exactly the traits that cause him to struggle with marketing."
Stewart cites farmers' proclivity for gathering information before making decisions. "For most farm management decisions, a farmer will study a problem, gather as much information as possible, and then make what he perceives to be a good decision. That is a wise approach. In marketing, however, by the time you gather all the information necessary to be confident, the move is over. That's what makes marketing decisions so frustrating. The typical decision-making processes simply do not work."
As a result, some farmers who take the MAP assessment go into it thinking they do not have enough time to gather information, or knowledge to gather the right information, Stewart says. "The MAP reveals that those aren't actually the most limiting factors. It is the farmer's tendency to want control that is impacting marketing outcomes most."
This is eye-opening for many producers, he adds. "Once we understand the most limiting factor, we can make suggestions for how to step up their marketing to the next level."
Stewart-Peterson offers the MAP free. If you honestly feel it wasn't worthwhile, they will pay you $100. See http://gainmarketingconfidence.com/…
Linda Smith can be reached at firstname.lastname@example.org