Wednesday, October 11, 2017

Here is how to decide when to sell your produce and by how much

Before you decide to sell or store, make sure that you have decided on the right price and know the market’s movements. Here are five steps... thumbnail 1 summary
Before you decide to sell or store, make sure that you have decided on the right price and know the market’s movements. Here are five steps to help you properly plan.

Step 1: Determine your production costs
Analyse the cost of production and make sure that you have covered your operating costs. Look back on your previous year’s income statement and expenses to determine your production costs.

Step 2: Determine the right price
Determine the break-even price for each commodity by estimating the production costs for each crop. Divide total cost of each crop by the expected yield. Your selling strategy should be geared towards selling above the break-even level.

Step 3: Keep an eye on market development
Get familiar with the indicated price direction for your commodities. Factors affecting the market today may not affect the market tomorrow so make sure that you monitor the market and the price changes.

Step 4: Plan sales according to cash flow
Dependent on your financial obligations it might be necessary to take grain to market or to store it. For example, in time of low prices stock can be stored until the market moves and prices have increased. Storage costs should also be taken into consideration.

Step 5: Make adjustments where necessary

Flexibility is essential for a successful market planning. This could mean offsetting a position previously taken in options that was later determined to be a poor position, or seeing a transaction through from decision to conclusion.


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