Wednesday, 02 October 2013 16:17

Are you a ‘Price Taker or a ‘Price Maker’?

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As farmers, how many times have you sent your cattle to market, with your fingers crossed hoping that you receive a good price at the end of the day?  With many of the commodities we sell as farmers – we are often in the situation of being ‘price takers’, meaning that we accept and take the price that is offered for our product on the day. And in reality the value of our product is reflective of what our customers are prepared to pay ‘on the day’, how does this nature of ‘risk taking’ sit with your business? This as we know can be frustrating, disappointing at times and pleasing at other times, but what ever way we look at it, being a farmer of any kind is a risky business. 

 

I have really started to reflect on this issue over the past few months, because now I have my own farm, where the responsibility for making a profit lies with me. At the moment we are very lucky and we have heaps of feed, a lot more than we anticipated, and until a week ago only had 33 steers to eat this. So we too have turned the decision making wheel on many angles – I am hoping that as we spend more time on our new farm, we will get much better at managing and understanding our land, environment and pastures.

Let’s face it though we are never going to be able to eliminate all of the risk around what we do and we will never have all of the answers to the many ‘unknowns’ that impact on us, but this is the way we like it, right?. As much as it would be nice to be able to accurately budget, knowing what price we were going to receive for what quality product on what date and have a crystal ball that could foresee the season and market prices – that’s not going to happen.  So the best thing we can do is try to work with what we have got, and do a better job of that, well this is my theory anyway.

Over the past couple of months I have been running some of Meat and Livestock Australia (MLA’s), Confident Livestock Marketing courses, and I have really enjoyed the conversations which this has created in the groups.  During this workshop – we really reflect on these issues of marketing and decision making, but importantly we break down the whole picture in the context of this equation.

 

So let me ask you a question…. Do you know how much it costs you to produce 1kg of beef? And if your answer is NO, well how do you know what price you are really happy with when it comes to point of sale? And does this encourage you to want to be a ‘price maker’ or a price taker’?

Food for thought! Enjoy pondering.

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