Dairy Milk Marketing Plan
The Risk Protection Program!
Key Elements:
1. Financial Analysis helps establish target prices and key profit areas.
2. 52 weekly updates from RCG via email or fax.
3. 52 weekly graph packets with special Milk charts.
4. Weekly conference call to discuss weekly recommendations.
5. Daily text messages on markets.
6. Unlimited access to Associate.
7. Position tracking and reconciliation for managed accounts.
Benefits:
1. Profit is cost of staying in business. Written goals increase likelihood of achieving them.
2. Peace of mind that margin is protected and risk managed.
3. Easy to use. We do the work and keep you informed.
4. Flexible. We can work various strategies with you to achieve objectives depending on cash flow and comfort with futures, options and forward cash contracts.
5. Feed cost price leader. RCG has proven track record of helping livestock farmers manage feed costs.
6. Team approach increases knowledge. RCG partnership with Country Hedging for maximum resources and seamless implementation.
7. Satisfaction Guarantee. You can stop at any quarter. We are here to earn a place in your business long term.
How the Plan Works:
Prepare expected milk production chart for each month of upcoming year. Update this monthly based on actual
production and changes in forecast production.
In general, do not get more than 65% sold greater than 4 months out of production
month. When closer than 4 months, a combination of fixed price contracts and unwound
futures contracts can be used to get to a greater percent sold. The goal is to lock in milk basis up to 50% of production prior to 3 months out and have prices
protected above profit trigger.
For simplicity, think of our strategy as following a particular cow through the year. The
market does this with the herd in general. During actual year we’ll have each month of contract somewhere in this process.
Strategy Timeline:
• Pre-Bred Strategy
• Post Bred Strategy
• Pre Dry Off Strategy
• Dry & Freshening Strategy
Potential Strategy Change:
Throughout this annual plan, we will evaluate upside potential. In most cases, we find it most cost effective to
simply price the next months production at the increased prices. However, there may be cases when we roll a
contract up, use put options or other strategies to provide greater upside potential if market appears it might break
out to upside. The risk of these contracts is increased costs and lower average prices if it does not materialize.
Alternatively, we might have to play catch up in a particular month and it might stay 27.5% sold for two months in
a row and then get to 52.5% sold in one month.
We will evaluate resistance lows and highs to determine trend based on technical analysis. This will help us
determine a particular strike price for various actions during the contract month, updated weekly. If we are in a
downtrend at beginning of new month, we’ll sell early in month. If we are in an uptrend, we’ll establish our next
resistance and allow market to trigger sale. If we are sideways, we’ll set trigger at resistance low or create a sell
by a particular date strategy.
Other Farm Risk Management Services:
• Grain Market MAX
• Russell Consulting Group
• Strategic planning workshops
• Business plan composition and editing
• Capital purchase & expansion plan financial analysis
(NPV, cashflow, etc.)
• Farm business brokerage... buy/sell entire operations
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