January 24, 2002

Marketing Clubs Teach Risk Management Skills

Across North Dakota, 43 groups of farmers have formed marketing clubs to help them learn the fine points of selling the commodities they produce along with overall financial risk management. These clubs are a joint effort of the NDSU Extension Service and the North Dakota Farm Business Management Program.

The 1999 and 2001 state legislative sessions made funds available to assist clubs formed for marketing education purposes. The marketing club program is coordinated by George Flaskerud, extension crops economist at North Dakota State University, and Steve Zimmerman of the North Dakota Farm Business Management Education Program.

The typical North Dakota farmer has long been aware of market trends and outlook and devotes considerable time and effort to financial risk management, but recent economic conditions have created even more interest in sharpening marketing skills.

According to Willie Huot, extension agent in Grand Forks County, there has been an explosion of interest in marketing clubs since funding to help get clubs started has been available. He says there are several reasons for the spike in interest. For one, depressed prices for farm products have provided an incentive.

Huot stresses that while marketing is a major emphasis the groups might more accurately be called "risk management" clubs. Other financial topics such as budgets, cash flow and integration with crop insurance also are discussed.

To qualify for financial assistance, a club must be formally structured, with elected officers and written by-laws, collect dues and meet regularly to conduct business and provide an educational program. An approved club is required to have one or two facilitators, usually extension agents or farm business management instructors.

The facilitator and club membership select an instructor to teach the 48 hours of approved curriculum over a two-year period. A club can receive funding assistance for a maximum of two years.

Flaskerud's role is to provide overall educational support for the program, including in-service training for extension agents and farm business instructors. Facilitators have received about 48 hours of in-service training since 1999. He also maintains a Web site with educational material for the club curriculum.

In a pilot project using technology paid for from a U.S. Department of Commerce grant, Flaskerud serves as instructor for marketing clubs in Langdon, Minot, Crosby and Hettinger using video conferencing via the Internet. The video camera is a small unit in his office. A second computer transmits visual aids. The method allows "in person" interaction without the time and expense of travel.

A typical marketing club has 10 to 25 members. Huot says membership in the clubs he works with vary in age from 19 to 70. Younger members can learn from the perspective of more experienced producers, while they may be more knowledgeable about the Internet and technology than their elders.

Some clubs use a model farm to practice marketing and risk management principles. Dale Siebert, extension agent in Richland County, says the club he facilitates has developed a model farm that is the average size for the county and uses county average yields for corn, soybeans and wheat. The club is divided into two groups, each developing a plan to create necessary cash flow and manage risk. The competition is a good learning tool, he says. Typically each group has different ideas about how and when to market, and they are able to learn from each other.

Six clubs specialize in livestock marketing. Mike Rose, Ward County extension agent, along with John Dhuyvetter, area extension livestock specialist, facilitate a club that involves producers from Bottineau, McHenry and Ward counties. This club follows the same structure as the crops marketing clubs, with emphasis on beef cattle marketing along with feed grains and energy issues. The group also discusses livestock industry development in the area, including marketing options and possible establishment of a commercial feedlot. Members also talk informally about pooling cattle and creating packages to increase market clout.

Huot says it is difficult to get a real handle on possible economic impact of marketing clubs, though he has observed that the club experience gives members the knowledge and confidence to use the principles they learn in their own operations.

A side benefit seen by Huot is that ag suppliers have become interested in working with marketing clubs, possibly leading to discounted prices on inputs. He also cites strength in numbers in marketing, where sometimes a more favorable price or basis can be negotiated. But the most important thing is that members are able to get a firm grasp of basic market concepts before moving on to more advanced training.

Individuals or groups interested in marketing clubs can contact Flaskerud at (701) 231-7377 or local county extension offices for more information.

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Source: George Flaskerud, (701) 231-7377, gflasker@ndsuext.nodak.edu
Editor: Gary Moran, (701) 231-7865, gmoran@ndsuext.nodak.edu