I spend most of my professional day working with issues connected to farm risk management, business analysis and marketing. More recently conventional grain marketing topics have received lots of attention. From this I notice that the discussions on alternate crops and alternative production systems intensify as conventional commodity prices decline. This makes sense. When a corn and soybean producer is generating adequate revenues to cover all production costs, increase the family's standard of living and even save or pay down debt, life feels good. As the downward price cycle arrives the fun of grain farming can quickly diminish. One natural response is to seek alternate forms of farm revenue.
Over the years I have responded to any number of questions on "What is the most profitable crop?" When I was still green at my Extension job I researched all the new crops, production methods, consumer trends and visions of a food future. Over time my current conclusion was formed as a response to this exploration of a more profitable crop to adopt. From what seems like endless reading and years of farmer conversation; my current conclusion is "there is no most profitable crop." What turns out to be the most significant factor in farm profitability is management skills of those people making farm decisions.
As an example; I know of unprofitable grass hay producers. I also know of profitable grass hay producers. I know of unprofitable organic raspberry producers and I also know of profitable organic raspberry producers. Are you with me here? I am not picking on any crop, farm, farmer, or production method. What I am trying to illustrate is that there is no evidence of a crop that offers a standard of profitability for everyone. Profitability is closely tied to management, and marketing is part of management. An effective management team can likely achieve above average farm profitability with any number of enterprises while a less effective farm management team will likely struggle with any enterprise.
When farm families and their management team are exploring alternate enterprises I suggest a few thoughts to consider. These thoughts include:
- Currently there is a heightened level of interest in alternative farm enterprises
- Buyers of alternate enterprise outputs are typically rare
- The marketing pipeline is probably not well established
- Bids and offers will not be readily available from a number of potential buyers
- It can be quite difficult to co-mingle certain types of enterprises
I spent many years as a farmer and I have spent many more years involved with farm business management and marketing research and education. While I have limited expertise to tell anyone if a new enterprise will be worth attempting, I do believe anything is possible and that we are only limited by our imagination.
If you and I get into a conversation about a more profitable crop I will ask you to consider my bias that:
- profitability is a challenge
- larger scales of operation are more difficult to manage
- consumers, and so end users, are fickle
- stuff happens.
Part of enhancing the skills of an effective marketer could be taking advantage of the opportunity for active involvement in marketing discussions.