grain trading business plan

Wholesale Grains: Starting a Wholesale Grains Business

About 12,000 years ago, the Agricultural Revolution changed the landscape of the world. Since then, grains have been an important part of our diet. Things are not likely to change in the near future. Crops will be part of our meals for millennia to come. Production of both food and beverage services and products is highly dependent on grains. In this article, we’ll examine the topic of wholesale grains, what they are, and how you can profit by starting a successful wholesale distribution business in that niche. If you’re currently a business owner in that field, you’ll probably find some useful information as well.

What Are Wholesale Grains?

Buying grains in bulk quantities is a standard business practice used by restaurants and other companies. The main benefit of bulk buying is that it usually comes at a lower price. Furthermore, the prices of commodities such as wheat, oat, and rice are constantly changing. Therefore, if businesses believe they’re about to increase, it might be better to stock these agricultural products while the prices are low.

Some of the most popular grains are wheat, corn, rice, barley, and oats. Wholesale vendors of these products trade primarily with food producers, food industry suppliers, retailers, and animal food producers. Since grains have a fairly long shelf life if stored properly, it can be beneficial for companies to buy bulk grains .

Key takeaway: Starting a wholesale grains business requires a fairly big investment. However, as the need for food is constantly expanding, there are many growth opportunities , and it can prove to be a very profitable one.

What Is Needed to Start a Wholesale Grains Business?

If you want to start a company in the field of wholesale grain trade, there are a few main steps to prepare the enterprise. 

Develop a Detailed Business Plan

It should include major components such as goals, competition, financial projections, and marketing channels. A wholesale grains business requires an investment of tens of thousands of dollars. Therefore, things such as the current macro environment should also be taken into consideration. The business plan needs to have future predictions on key metrics such as business growth, revenue, and profit. This way, it will serve as a roadmap for the business.

Research the Market Regulations

Before you start your wholesale grains business, check how the grains should be stored, what permits are needed to buy and sell them, and how long it will take to obtain the needed licenses. Getting a tax ID number and business license are fairly common procedures. The ones that might require more time and additional investments are the certifications required to operate a grains business. They depend on the scale, the types of traded products, and other factors.

Find the Right Producers

A wholesale grains company acts as a middleman between agricultural producers and businesses such as food manufacturers. This means you need to take care of finding both clients and producers. Make sure to establish partnerships with farming companies in places such as trade shows or via membership in industry associations.

Additionally, choose the right types of grains to buy and sell. If your business investment is not very big, you should start with the most common types such as corn and wheat.

The Location Shouldn’t Be Underestimated

Finding a proper location is very important. It should be with good logistics in terms of roads. Proximity to railway stations and ports is also a bonus. Probably the main factor is the space itself. It should be enough to store the different grains. Also, cold temperatures and dry conditions are required in any grain storage . 

Tools and Machinery

The main investments in that regard should be related to trucks, forklifts, pallet jacks, and other tools related to warehouse management.

Marketing and Pricing

If you’re planning to sell bulk grains , you should create a detailed marketing plan. It should include channels, personas, and ad budgets. In this business niche, attending local and international conferences can be a great way to find new customers and partners. Also, benefit from the opportunity to become a member of all relevant associations.

Consider your pricing carefully. As mentioned above the price of agricultural commodities is constantly changing. Thus, you need to be flexible and base your prices not only on business costs and competition but also on factors such as future crop yields. 

What Clients Does a Wholesale Grains Business Aim For?

A variety of businesses can be clients of a wholesale grains business. Let’s check the main ones.

• Food manufacturers . Whole grains are key ingredients in a variety of foods like whole grain breakfast cereal. Manufacturers usually buy bulk quantities so acquiring even a few clients in that market has the potential to maximize revenue .
• Retailers . Grocery stores and supermarkets sell packaged grains in small and large quantities. If your business has the right packaging equipment, you can offer your products to supermarkets.
• Restaurants and catering businesses . A lot of recipes have grains as the main ingredients. That’s why restaurants are valuable potential clients to a wholesale grains business .
• Animal feed producers . These companies buy wholesale grains in very large quantities. Corn, barley, and wheat are used in the animal feeding of poultry and livestock. Keep in mind that animal feed producers or livestock management companies primarily focus on the price, and you should consider giving a discount for long-term commitment or large quantities ordered.
• Exporters . The US is the biggest producer and exporter of corn in the world. But corn is not the only thing exported. The fertile soils of America combined with modern agricultural solutions equal high yields. Ergo, a wholesale grains business should aim to partner with exporters and international buyers. This is especially true for countries with worse climates or regions that have suffered a drought as the prices there might be higher.

Can You Sell Wholesale Grains Online?

Nowadays, the eCommerce market is growing rapidly. All kinds of products and services can be bought online and grains are no exception. Having a modern website can be a big benefit for a grain wholesaler. It allows using modern digital marketing channels such as email marketing , social media, or search engine optimization. 

One of the reasons why a grains wholesale business should have a website is the fact this is your online business card. If you’re attending trade shows or international conferences, businesses and potential customers will look you up online. Additionally, an online store will help your business sell directly to customers as well. If your plan includes being both B2B and B2C business, a well-maintained eCommerce solution is a must.

Among the most important eCommerce marketing channels for a wholesale gran business is eCommerce email marketing . You can collect customer data and create different audiences based on your B2B or B2C customers. Furthermore, you can promote informational content such as blogs to your current customers. This creates brand loyalty and increases the likelihood of people buying again.

Frequently Asked Questions about Wholesale Grains

Are you considering starting a grains wholesale business? Or maybe you’re generally interested in this market niche? Either way, allow us to answer some of the most common questions on this topic.

Where to Buy Wholesale Grains?

You can find wholesale vendors in online marketplaces such as BlueCart . Additionally, there are many websites, such as Webstaurant Store, that specialize in products for the food industry. 

Should I Buy Bulk Grains?

There are many benefits to buying large quantities of grains. For starters, they have a long shelf life if stored properly. Additionally, food prices are always rising and bulk buying makes fiscal sense. 

How Are Grains Traded?

Like most commodities, a large part of grains trade is in the futures market. That makes sense as businesses plan for how many grains they will require in the future. On the other hand, producers benefit from the opportunity to sell their future yields.

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Understanding the basics of grain trading in the us.

Grain trading is an essential aspect of the agricultural industry in the United States. The country is the world’s largest producer and exporter of corn, soybeans, and wheat, making it a significant player in international grain markets. Understanding the basics of grain trading in the US is crucial for farmers, traders, and investors who are involved in the industry.

What is Grain Trading?

US Grain trading refers to the buying and selling of grain commodities such as corn, soybeans, wheat, and other crops. The trading is done in futures contracts, and the prices are determined by supply and demand factors in the market. Futures contracts are agreements to buy or sell a specific commodity at a predetermined price and date in the future.

Grain Exchanges in the US

Grain trading in the US is conducted on organized exchanges, the most prominent being the Chicago Board of Trade (CBOT), the Kansas City Board of Trade (KCBT), and the Minneapolis Grain Exchange (MGEX). These exchanges provide a platform for trading futures and options contracts on various grain commodities.

Factors Affecting Grain Prices

The prices of grain commodities are influenced by various factors, including: 

Supply and demand, weather conditions, government policies, transportation costs, and global market trends. The availability of crops and the level of demand for them can impact the price of grain commodities. Weather conditions such as drought or flooding can reduce crop yields, leading to lower supply and higher prices. Government policies such as subsidies or trade agreements can also affect prices. Transportation costs, including fuel prices and logistics, can impact the price of grain commodities as well. Finally, global market trends, such as changes in consumption patterns or currency fluctuations, can also impact the prices of grain commodities.

Types of Grain Trading

There are two main types of grain trading in the US: cash trading and futures trading. 

Cash trading involves the actual physical exchange of grain between buyers and sellers at a specific location and time, typically with payment made at the time of delivery. Futures trading, on the other hand, involves contracts for the future delivery of grain at a predetermined price. This allows farmers and grain buyers to manage their price risk, as they can lock in a price for future delivery, regardless of market fluctuations. Both types of trading are important for the agricultural industry and play a significant role in global food supply chains.

Grain Trading Strategies

Grain trading strategies vary depending on the market conditions and the trader’s risk tolerance. Some common strategies include: 

• Trend following – This strategy involves analyzing the market trends and trading in the direction of the trend. For example, if the market is trending upwards, the trader will buy grain contracts and vice versa.
• Mean reversion – This strategy involves buying or selling grain contracts when prices deviate significantly from their historical averages. The trader believes the prices will eventually revert to their mean values.
• Spread trading – This strategy involves taking positions in two or more related grain contracts to profit from the price difference between them. For example, the trader may buy wheat contracts and sell corn contracts if he believes wheat prices will rise relative to corn prices.
• Options trading – This strategy involves buying or selling options contracts to hedge against price fluctuations or to profit from them. For example, the trader may buy a call option if he thinks that grain prices will rise, or a put option if he thinks that they will fall.
• Scalping – This strategy involves making small profits by buying and selling grain contracts quickly. The trader profits from the small price movements that occur throughout the day.

Overall, successful grain trading requires a combination of technical analysis, fundamental analysis, and risk management techniques. Traders must also stay up-to-date on market news and events that could impact grain prices.

Risks of Grain Trading

Grain trading involves risks that are inherent in any investment activity. Some common risks include: 

Commodity price fluctuations, weather-related risks, geopolitical risks, credit risks, and operational risks. Commodity price fluctuations are the most significant risk, as the prices of grains can be affected by various factors such as supply and demand, currency fluctuations, and political events. Weather-related risks include droughts, floods, and other natural disasters that can impact crop yields and quality. Geopolitical risks can arise from political instability, trade disputes, and sanctions that can affect the trade and transportation of grains. Credit risks involve the possibility of a counterparty defaulting on a payment or failing to fulfill a contract. Operational risks can arise from errors, fraud, or other problems in the trading process. To mitigate these risks, grain traders use various risk management tools such as futures contracts, options, and insurance.

The basics of grain trading in the US involve understanding the market dynamics, the trading platforms, and the risks involved. Grain trading provides a means for farmers, grain elevators, and other market participants to hedge against price fluctuations in the cash market. The industry is influenced by various factors such as weather conditions, supply and demand, government policies, and international markets. Successful grain traders employ various strategies such as hedging, speculation, and spread trading to maximize profits and minimize risks.

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INDAME GRAINS MARKET BUSINESS PLAN

Business plan igaragaza uko wacunga warehouse business

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According to Corral, Díaz, Monagas andGarcía (2017),the objective of increasing agricultural incomes in developing countries ranks high on the political agenda. Especially, in Sub-Saharan Africa (SSA), the majority of the population lives in rural areas with higher levels of poverty than in urban areas, and almost all rural households depend directly or indirectly on agriculture. Rwanda " s agricultural policies are embedded in a frame work of conventions and protocols such as the Millennium Development Goals (MDGs), Sustainable Development Goals (SDGs), the New Partnership for African Development (NEPAD), Common Markets for Eastern andSouthern Africa (COMESA), the East African Community (EAC), Vision 2020, the Economic Development and Poverty Reduction strategy(EDPRS) and finally the Plan for Strategic Transformation of Agriculture (PSTA). The government has initiatedCrop Intensification Program (CIP) to increase productivity for six priority crops namely Maize, Wheat, Rice, Irish potato, Beans and Cassava. Taking Maize as a case study, the present research analyzed the role of agriculture policies in improving maize production in Rwanda during 1995 to 2018. The data were provided by the National Institute of Statistics of Rwanda (NISR) and Index Mundi and they were analyzed using Eviews 8 software. The research found that agriculture policies have led to important achievements: Maize production passed from 57 metric ton to 660 metric tons; The individual consumption of maize passed from an estimation of 9.87 kg per year to 43.24 kg; Maize importation passed from 4 metric tons to 107 metric tons; Rwanda started exporting maize since 2010 starting from 5 metric tons to 10 metric ton since 2012 up to 2017. However, despite such impressive achievements, the research noted that many efforts have to be engaged because the production remains lower that required to satisfy the food security for the population.

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Land‐scarce Rwanda is an unlikely place in which to find ‘land grabbing’. However, an ongoing legal, institutional and financial re‐configuration of the agricultural sector in Rwanda facilitates increased penetration of rural smallholder farming systems by Rwandan and international capital which may include some large‐scale ‘land grabbing’ by foreign corporations. More often, foreign agricultural investment in Rwanda is likely to take the form of involvement in contract farming arrangements with cooperatives. Such contracts are facilitated by the state, which when necessary uses coercive mechanisms as well as highly interventionist strategies (such as regional crop specialization policies and mandatory land use consolidation)to create an ‘enabling environment’ for agricultural investment. The Rwandan government has adapted neo‐liberal tools, such as ‘performance management contracts’, through which it makes local public administrators accountable for agricultural ‘development’ targets, which are often explicitly linked to corporate interests. Philanthropic activities by international development agencies are also often intertwined with the activities of the state and foreign capital, so that a variety of actors and objectives are collaboratively changing the relations between land and labour, and exposing smallholder farmers to regional and global markets. Such processes suggest that the global ‘land grab’ is only one aspect of broader patterns of reconfiguration of control over land and labour in the Global South, and that critical attention should be paid to various modes of ‘agricultural investment’, not just acquisition of large areas of land.

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Rwanda is implementing the self-sustaining extension system through Farmer Field Schools (FFS) and Farmer Promoters (FP) approaches. The objective of this paper was to find out the impact of self-sustaining extension system in order to help stakeholders to improve its current implementation. The methodology includes a desk review of reports, face to face interview with 60 participants and 5 focus group discussions between February and May 2016. It also includes the interview of 400 trained farmers and 400 non-trained farmers. It was found that 92% of the trained FFS facilitators and 62% of the farmer promoters were very active in extension services. It was also found that for beans, the highest average yield was 1.2 t/ha for non-trained farmers, 1.5 t/ha for FFS farmers, 1.3 t/ha for FP farmers and the average yield of all the farmers was worked out to be 1.4 t/ha. It was found that FFS trained farmers produce 37.5% more than non-trained farmers while farmers trained by Farmer Promoters produce 10.8% more than non-trained farmers. In general, 37.8% of farmers apply Good Agricultural Practices (GAP) among the non-trained farmers, 73% of FFS farmers use the GAP and 68.3% of the FP farmers adopt the GAPs. It was found that 20% of the FFS group activities are involved in various income generating activities compared to non-trained farmers (10%). It is concluded that the implementation of self-sustaining agricultural extension system in Rwanda has a strong impact in agricultural development through motivation and increased trainings of farmer promoters.

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The Three Pillars of Grain Trading

Date Posted: Oct 18, 2023

Fundamental Analysis | Technical Analysis | Seasonality

Uncertainty and volatility in the grain markets can be difficult to navigate, due in part to ever-changing fundamental and technical landscapes.

Using fundamental and technical analysis, along with seasonality, are the three pillars of grain trading. The first step toward honing your grain trading strategy is understanding the basic fundamentals that impact grain markets. From there, you can tie in technical analysis to help define potential entry and exit points and manage a position around your market bias and your risk appetite.

Lastly, you can view seasonal tendencies as the cherry on top. The alignment of all three pillars results in a high-conviction trade setup.

Grain Market Fundamentals: Yields, Acres, and Production

Corn and soybean yields get all the attention when it comes to discussing the grain markets, but to make those numbers mean anything, we also need to look at planted and harvested acres. Those numbers combine to give us the all-important production number, which is the supply side of the equation.

Inventories

Alongside production, we need to look at the stocks-to-usage ratio, which gives us an understanding of what global end users have at their disposal. If stocks are relatively high, then prices likely will be depressed, as there is no immediate demand for replacement.

Stocks-To-Usage Ratios

Once a broad-based picture of the supply situation is painted, analyzing how much of that production is currently being utilized, compared to how much of it is being stored for later usage, is paramount.

Global stocks-to-usage ratios have an inverse correlation between season-average- farm-prices (SAFP) received domestically. The chart at the top of p. 69 displays the previous 30 years of data relating to global stocks-to-usage ratios compared to SAFP for corn.

The job here is to delve into specifics – we need to define what ending stocks and usage means. Simply put, ending stocks for corn or soybeans is simply the difference between total supply (foreign and domestic) and usage (again, foreign and domestic). There are myriad components to usage, but the relationship between total supply and usage is paramount.

Blue Line Futures is adamant in employing a “quanti-mental” approach to market analysis. Fundamental analysis provides an overarching direction of the trend, but technical analysis is imperative to determine the health within that fundamental trend. Knowing where you are within a trend is imperative for making entry and exit decisions or managing a position, no matter what contract you are trading.

Support and Resistance

Support is found in downward trends and represents a price, or range of prices, in which bulls historically re-enter the market.

By re-entering the market, bulls have the capacity to either halt or reverse the downtrend. Support can be found via trendlines, significant moving averages, and price history where clusters of prices are traded numerous times.

Resistance is effectively the opposite of support. It is found in upward trending markets, and it represents a price, or range of prices, in which bears historically re-enter the market. When a market hits resistance, it puts the uptrend in jeopardy because it can halt or stop a rally. In trading, when a market reaches a resistance pocket, traders may look to reduce

Pivot Pockets

In futures trading, pivot pockets are viewed as “no man’s land” or an inflection point for the market, meaning that the market has an equal likelihood of moving in either direction. Pivot pockets can be utilized as entry targets for breakouts (up or down). Put differently, a bullish trader may place an entry order just above the higher boundary of a pivot pocket, then have a profit target toward the middle or lower boundary of the nearest resistance pocket.

Seasonality

Seasonality is one of the most important concepts when it comes to grains and other physical commodities. The term “seasonality” refers to recurring patterns and trends that occur in prices over the duration of a year.

For example, grain markets typically trend lower in the fall as harvest progresses because there is more available supply coming to the market. Conversely, grain markets trend higher ahead of planting season as supply is lower, and the degree of uncertainty regarding the new crop year’s production is at its highest. A comprehensive database on seasonal tendencies can be an incredibly valuable to gain a greater understanding of seasonality.

The chart provides an example of a higher-conviction seasonal setup. The black line represents the current year, while the other lines represent prices averages for the last five, 10, 15, 20, and 30 years. Having this type of information at your fingertips or working with someone who does can be extremely helpful.

Matt Bresnahan is a market strategist for Blue Line Futures, Chicago, IL, (312) 858-7305 .

Blue Line Futures is a dedicated futures brokerage that takes pride in assisting grain producers, intermediaries, and end-users in navigating futures markets, and mitigating their exposure to commodity price risk. Are you ready to take your trading to higher highs? Reach out to us at [email protected] or call into our trade desk at (312) 858-0500 .

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Developing a grain marketing plan in 5 easy steps.

If you didn’t know where to start or thought developing your own grain marketing plan was too difficult, check out these tips for writing and using a plan throughout the year to meet your goals.

1. Break the total amount you have to sell down into smaller units.

Break the total amount of grain you have to market down into smaller units. Most producers think in 1,000- or 5,000-bushel segments, depending on how much grain has to be sold.  

Post-Harvest : If you are post-harvest marketing, you can only sell the grain that is unpriced in the grain bin.

Pre-Harvest : If you are pre-harvest marketing, do not sell more than you have insured. You do not have to sell any bushels before harvest. To calculate how many bushels you have insured, multiply the Actual Production History (APH) by the number of acres of the commodity you plan to plant or have planted in a given field. This gives you the expected production. Then multiply the expected production by the insurance rate.

For example, let’s say you have a 200-acre corn field with an APH of 180 bushels per acre and a 70% insurance rate. The expected production is 36,000 bushels (200 X 180 = 36,000). However, the insured amount is 25,200 bushels (36,000 X 0.70 = 25,200). The insured amount can be broken into five units, each approximately 5,000 bushels.

2. Set price targets.

The next step is to determine an average price you want to sell at and then create price targets around that average.

Let’s say the average price you want to obtain is $3.50 per bushel. If you have five equal quantities to sell, you could set price targets at $3.30, $3.40, $3.50, $3.60 and $3.70.

It is important that you set realistic price targets. Setting prices too high or too low may be detrimental to your plan.  At minimum, your price targets (pre- or post-harvest) should exceed your established cash flow price.

Post-Harvest : When determining price targets after harvest, you will want to set targets above the price you could have obtained at harvest, plus any additional expenses accrued by storage. Expenses to consider are bin rental, insurance on grain in storage, and additional interest expense on operating notes.

Pre-Harvest : When setting pre-harvest price targets, you want to price grain above your cost of production. Some marketers suggest that you do not pre-price grain if you cannot break even.

3. Set sale deadlines.

If prices do not rise enough to meet your price target, you need to set sales deadlines to ensure you are proactive about pricing. Target prices and sales deadlines work together to help you make sales throughout the year.

Commodity prices typically have a defined seasonal price pattern. Setting sales deadlines that correspond with periods when prices are traditionally highest will help make marketing easier. Price patterns vary by commodity. Corn prices are typically highest in the spring (March-June,) and soybean prices are traditionally highest during the summer (June-July).

Your cash flow needs are another consideration when selecting sales deadlines. Are there certain times of the year that you need to make sales in order to make payments? Plan ahead and have this cash ready by setting sales deadlines ahead of payment dates.

4. Know your marketing tools.

There are several types of contracts you can use to sell grain. We call these marketing tools. You should work with your local elevator or broker to determine what marketing tools are available to you and what tools you should be using to achieve your price targets and sales deadlines. The common marketing tools offered by most local elevators are cash sales, forward cash contracts, basis contracts, and hedge-to-arrive (HTA) contracts. You can also work with a broker to establish hedges, puts, or calls.

5. Share your plan with someone else.

Once you have written your plan, share it with someone else. Sharing your goals with your spouse, merchandiser, or banker will help keep you accountable to your marketing goals.

Marketing plans can become more complex. However, this basic outline will help you get started.  Remember:  the goal of a marketing plan is to keep you on track with the goals you determined at the beginning of the crop cycle.

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How to write a business plan for a grain mill?

Writing a business plan for a grain mill can be an intimidating task, especially for those just starting.

This in-depth guide is designed to help entrepreneurs like you understand how to create a comprehensive business plan so that you can approach the exercise with method and confidence.

We'll cover: why writing a grain mill business plan is so important - both when starting up, and when running and growing the business - what information you need to include in your plan, how it should be structured, and what tools you can use to get the job done efficiently.

Let's get started!

In this guide:

Why write a business plan for a grain mill?

• What information is needed to create a business plan for a grain mill?
• What goes in the financial forecast for a grain mill?
• What goes in the written part of a grain mill business plan?
• What tool can I use to write my grain mill business plan?

Being clear on the scope and goals of the document will make it easier to understand its structure and content. So before diving into the actual content of the plan, let's have a quick look at the main reasons why you would want to write a grain mill business plan in the first place.

To have a clear roadmap to grow the business

It's rarely business as usual for small businesses. The economy follows cycles where years of growth are followed by recessions, and the business environment is always changing with new technologies, new regulations, new competitors, and new consumer behaviours appearing all the time...

In this context, running a business without a clear roadmap is like driving blindfolded: it's dangerous at best. That's why writing a business plan for a grain mill is essential to create successful and sustainable businesses.

To write an effective business plan, you will need to take stock of where you are (if you are already in business) and where you want the business to go in the next three to five years.

Once you know where you want your grain mill to be, you'll have to identify:

• what resources (human, equipment, and capital) are needed to get there,
• at what pace the business needs to progress to get there in time,
• and what risks you'll face along the way.

Going through this process regularly is beneficial, both for startups and existing companies, as it helps make informed decisions about how best to allocate resources to ensure the long-term success of the business.

To anticipate future cash flows

Regularly comparing your actual financial performance to the projections in the financial forecast of your grain mill's business plan gives you the ability to monitor your business's financial health and make necessary adjustments as needed.

This practice allows you to detect potential financial issues, such as unexpected cash shortfalls before they escalate into major problems. Giving you time to find additional financing or put in place corrective measures.

Additionally, it helps you identify growth opportunities, like excess cash flow that could be allocated to launch new products and services or expand into new markets.

Staying on track with these regular comparisons enables you to make well-informed decisions about the amount of financing your business might require, or the excess cash flow you can expect to generate from your main business activities.

To secure financing

A detailed business plan becomes a crucial tool when seeking financing from banks or investors for your grain mill.

Investing and lending to small businesses are very risky activities given how fragile they are. Therefore, financiers have to take extra precautions before putting their capital at risk.

At a minimum, financiers will want to ensure that you have a clear roadmap and a solid understanding of your future cash flows (like we just explained above). But they will also want to ensure that your business plan fits the risk/reward profile they seek.

This will off-course vary from bank to bank and investor to investor, but as a rule of thumb. Banks will want to see a conservative financial management style (low risk), and they will use the information in your business plan to assess your borrowing capacity — the level of debt they think your business can comfortably handle — and your ability to repay the loan. This evaluation will determine whether they'll provide credit to your grain mill and the terms of the agreement.

Whereas investors will carefully analyze your business plan to gauge the potential return on their investment. Their focus lies on evidence indicating your grain mill's potential for high growth, profitability, and consistent cash flow generation over time.

Now that you recognize the importance of creating a business plan for your grain mill, let's explore what information is required to create a compelling plan.

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Information needed to create a business plan for a grain mill

Drafting a grain mill business plan requires research so that you can project sales, investments and cost accurately in your financial forecast, and convince the reader that there is a viable commercial opportunity to be seized.

Below, we'll focus on three critical pieces of information you should gather before starting to write your plan.

Carrying out market research for a grain mill

Carrying out market research before writing a business plan for a grain mill is essential to ensure that the financial projections are accurate and realistic.

Market research helps you gain insight into your target customer base, competitors, pricing strategies and other key factors which can have an impact on the commercial success of your business.

In particular, it is useful in forecasting revenue as it provides valuable data regarding potential customers’ spending habits and preferences.

You may find that people are interested in grain mills that have multiple functions, such as the ability to grind multiple types of grains. Additionally, market research might reveal that people are looking for grain mills that are easier to use and require less maintenance, which could indicate a preference for automated or electric grain mills.

This information can then be used to create more accurate financial projections which will help investors make informed decisions about investing in your grain mill.

Developing the sales and marketing plan for a grain mill

As you embark on creating your grain mill business plan, it is crucial to budget sales and marketing expenses beforehand.

A well-defined sales and marketing plan should include precise projections of the actions required to acquire and retain customers. It will also outline the necessary workforce to execute these initiatives and the budget required for promotions, advertising, and other marketing efforts.

This approach ensures that the appropriate amount of resources is allocated to these activities, aligning with the sales and growth objectives outlined in your business plan.

The staffing and capital expenditure requirements of a grain mill

Whether you are starting or expanding a grain mill, it is important to have a clear plan for recruitment and capital expenditures (investment in equipment and real estate) in order to ensure the success of the business.

Both the recruitment and investment plans need to be coherent with the timing and level of growth planned in your forecast, and require appropriate funding.

Staffing costs for a grain mill might include salaries for mill workers, maintenance personnel, and management staff. Equipment costs might include the purchase of grinding equipment, such as grinders, sifters, and mixers, as well as storage tanks, conveyor belts, and other necessary tools and machines.

In order to create a realistic financial forecast, you will also need to consider the other operating expenses associated with running the business on a day-to-day basis (insurance, bookkeeping, etc.). 

Once you have all the necessary information to create a business plan for your grain mill, it is time to start creating your financial forecast.

What goes into your grain mill's financial forecast?

The financial forecast of your grain mill will enable you to assess the profitability potential of your business in the coming years and how much capital is required to fund the actions planned in the business plan.

The four key outputs of a financial forecast for a grain mill are:

• The profit and loss (P&L) statement ,
• The projected balance sheet ,
• The cash flow forecast ,
• And the sources and uses table .

Let's take a closer look at each of these.

The projected P&L statement

Your grain mill forecasted P&L statement enables the reader of your business plan to get an idea of how much revenue and profits your business is expected to make in the near future.

Ideally, your reader will want to see:

• Growth above the inflation level
• Expanding profit margins
• Positive net profit throughout the plan

Expectations for an established grain mill will of course be different than for a startup. Existing businesses which have reached their cruising altitude might have slower growth and higher margins than ventures just being started.

The forecasted balance sheet of your grain mill

The projected balance sheet of your grain mill will enable the reader of your business plan to assess the overall financial health of your business.

It shows three elements: assets, liabilities and equity:

• Assets: are productive resources owned by the business, such as equipment, cash, and accounts receivable (money owed by clients).
• Liabilities: are debts owed to creditors, lenders, and other entities, such as accounts payable (money owed to suppliers).
• Equity: includes the sums invested by the shareholders or business owners and the profits and losses accumulated by the business to date (which are called retained earnings). It is a proxy for the value of the owner's stake in the business.

Analysing your grain mill projected balance sheet provides an understanding of your grain mill's working capital structure, investment and financing policies.

In particular, the readers of your plan can compare the level of financial debt on the balance sheet to the equity value to measure the level of financial risk (equity doesn't need to be reimbursed, while financial debt must be repaid, making it riskier).

They can also use your balance sheet to assess your grain mill's liquidity and solvency:

• A liquidity analysis: focuses on whether or not your business has sufficient cash and short-term assets to cover its liabilities due in the next 12 months.
• A solvency analysis: takes and longer view to assess whether or not your business has the capacity to repay its debts over the medium-term.

The cash flow forecast

A projected cash flow statement for a grain mill is used to show how much cash the business is generating or consuming.

The cash flow forecast is usually organized by nature to show three key metrics:

• The operating cash flow: do the core business activities generate or consume cash?
• The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
• The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?

As we discussed earlier, cash is king and keeping an eye on future cash flows an imperative for running a successful business. Therefore, you can expect the reader of your grain mill business plan to pay close attention to your cash flow forecast.

Also, note that it is customary to provide both yearly and monthly cash flow forecasts in a business plan - so that the reader can analyze seasonal variation and ensure the grain mill is appropriately funded.

The initial financing plan

The sources and uses table or initial financing plan is a key component of your business plan when starting a grain mill.

It shows where the capital needed to set up the business will come from (sources) and how it will be spent (uses).

This table helps size the investment required to set up the grain mill, and understand how risks will be distributed between the business owners, and the financiers.

The sources and uses table also highlights what the starting cash position will be. This is key for startups as the business needs to have sufficient funding to sustain operations until the break-even point is reached.

Now that you have a clear understanding of what will go into the financial forecast of your grain mill business plan, let's have a look at the written part of the plan.

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The written part of a grain mill business plan

The written part of a grain mill business plan is composed of 7 main sections:

• The executive summary
• The presentation of the company
• The products and services
• The market analysis
• The strategy
• The operations
• The financial plan

Throughout these sections, you will seek to provide the reader with the details and context needed for them to form a view on whether or not your business plan is achievable and your forecast a realistic possibility.

Let's go through the content of each section in more detail!

1. The executive summary

The first section of your grain mill's business plan is the executive summary which provides, as its name suggests, an enticing summary of your plan which should hook the reader and make them want to know more about your business.

When writing the executive summary, it is important to provide an overview of the business, the market, the key financials, and what you are asking from the reader.

Start with a brief introduction of the business, its name, concept, location, how long it has been in operation, and what makes it unique. Mention any services or products you plan to offer and who you sell to.

Then you should follow with an overview of the addressable market for your grain mill, current trends, and potential growth opportunities.

You should then include a summary of your key financial figures such as projected revenues, profits, and cash flows.

Finally, you should detail any funding requirements in the ask section.

2. The presentation of the company

As you build your grain mill business plan, the second section deserves attention as it delves into the structure and ownership, location, and management team of your company.

In the structure and ownership part, you'll provide valuable insights into the legal structure of the business, the identities of the owners, and their respective investments and ownership stakes. This level of transparency is vital, particularly if you're seeking financing, as it clarifies which legal entity will receive the funds and who holds the reins of the business.

Moving to the location part, you'll offer a comprehensive view of the company's premises and articulate why this specific location is strategic for the business, emphasizing factors like catchment area, accessibility, and nearby amenities.

When describing the location of your grain mill, you could emphasize the potential for growth in the region. You may point out that the area has a large population of people who could be potential customers for your grain mill, and that the area is expected to grow in the near future. Additionally, you could highlight the excellent access to transportation and infrastructure that could make it easier to move your product around. Finally, you could mention the potential for other business opportunities in the area, such as other food-related businesses that could be potential customers for your grain mill.

Lastly, you should introduce your esteemed management team. Provide a thorough explanation of each member's role, background, and extensive experience.

It's equally important to highlight any past successes the management team has achieved and underscore the duration they've been working together. This information will instil trust in potential lenders or investors, showcasing the strength and expertise of your leadership team and their ability to deliver the business plan.

3. The products and services section

The products and services section of your grain mill business plan should include a detailed description of what your company sells to its customers. 

For example, your grain mill might offer organic grains, specialty flours, and grain milling services to its customers. Organic grains are guaranteed to be free of synthetic pesticides, fertilizers, and other chemicals. Specialty flours include flours for baking, such as almond, coconut, and oat flours, that offer unique flavors and textures to baked goods. Grain milling services provide freshly milled grains for customers, preserving the natural flavor, texture, and nutritional value of the grain.

The reader will want to understand what makes your grain mill unique from other businesses in this competitive market.

When drafting this section, you should be precise about the categories of products or services you sell, the clients you are targeting and the channels that you are targeting them through. 

4. The market analysis

When presenting your market analysis in your grain mill business plan, you should detail the customers' demographics and segmentation, target market, competition, barriers to entry, and any regulations that may apply.

The goal of this section is to help the reader understand how big and attractive your market is, and demonstrate that you have a solid understanding of the industry.

You should start with the demographics and segmentation subsection, which gives an overview of the addressable market for your grain mill, the main trends in the marketplace, and introduces the different customer segments and their preferences in terms of purchasing habits and budgets.

The target market section should follow and zoom on the customer segments your grain mill is targeting, and explain how your products and services meet the specific needs of these customers.

For example, your target market might include people interested in baking their own bread. This market may be drawn to the grain mill because of the freshness and quality of the ingredients. They might also be attracted to the convenience of being able to mill their own grains at home.

Then comes the competition subsection, where you should introduce your main competitors and explain what differentiates you from them.

Finally, you should finish your market analysis by giving an overview of the main regulations applicable to your grain mill.

5. The strategy section

When writing the strategy section of a business plan for your grain mill, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

The competitive edge subsection should explain what sets your company apart from its competitors. This part is especially key if you are writing the business plan of a startup, as you have to make a name for yourself in the marketplace against established players.

The pricing strategy subsection should demonstrate how you intend to remain profitable while still offering competitive prices to your customers.

The sales & marketing plan should outline how you intend to reach out and acquire new customers, as well as retain existing ones with loyalty programs or special offers. 

The milestones subsection should outline what your company has achieved to date, and its main objectives for the years to come - along with dates so that everyone involved has clear expectations of when progress can be expected.

The risks and mitigants subsection should list the main risks that jeopardize the execution of your plan and explain what measures you have taken to minimize these. This is essential in order for investors or lenders to feel secure in investing in your venture.

Your grain mill may face a variety of risks. For example, your company could be exposed to the risk of theft. Grain is a valuable commodity, and your company could be vulnerable to theft if proper security measures are not taken. Additionally, your grain mill could also be exposed to the risk of a natural disaster. Floods, fires, and other disasters could damage equipment, buildings, and the grain itself, leading to significant financial losses. Taking steps to protect against these risks can help to reduce the potential impact of any unfortunate event.

6. The operations section

The operations of your grain mill must be presented in detail in your business plan.

The first thing you should cover in this section is your staffing team, the main roles, and the overall recruitment plan to support the growth expected in your business plan. You should also outline the qualifications and experience necessary to fulfil each role, and how you intend to recruit (using job boards, referrals, or headhunters).

You should then state the operating hours of your grain mill - so that the reader can check the adequacy of your staffing levels - and any plans for varying opening times during peak season. Additionally, the plan should include details on how you will handle customer queries outside of normal operating hours.

The next part of this section should focus on the key assets and IP required to operate your business. If you depend on any licenses or trademarks, physical structures (equipment or property) or lease agreements, these should all go in there.

You may have key assets in the form of physical infrastructure or machinery, such as grain storage silos or grinding machines. You could also have intellectual property such as proprietary grain milling processes or unique recipes for the finished product. These assets and IP might give your grain mill a competitive edge in the market.

Finally, you should include a list of suppliers that you plan to work with and a breakdown of their services and main commercial terms (price, payment terms, contract duration, etc.). Investors are always keen to know if there is a particular reason why you have chosen to work with a specific supplier (higher-quality products or past relationships for example).

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of the content of a grain mill business plan, let's look at some of the tools you can use to create yours.

What tool should I use to write my grain mill's business plan?

In this section, we will be reviewing the two main solutions for creating a grain mill business plan:

• Using specialized online business plan software,
• Outsourcing the plan to the business plan writer.

Using an online business plan software for your grain mill's business plan

Using online business planning software is the most efficient and modern way to write a grain mill business plan.

There are several advantages to using specialized software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can access a library of dozens of complete business plan samples and templates for inspiration
• You get a professional business plan, formatted and ready to be sent to your bank or investors
• You can easily track your actual financial performance against your financial forecast
• You can create scenarios to stress test your forecast's main assumptions
• You can easily update your forecast as time goes by to maintain visibility on future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

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Hiring a business plan writer to write your grain mill's business plan

Outsourcing your grain mill business plan to a business plan writer can also be a viable option.

Business plan writers are experienced in writing business plans and adept at creating financial forecasts without errors. Furthermore, hiring a consultant can save you time and allow you to focus on the day-to-day operations of your business.

However, hiring business plan writers is expensive as you are paying for the software used by the consultant, plus their time, and their profit margin of course.

From experience, you need to budget at least £1.5k ($2.0k) excluding tax for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the initial meetings with lenders or investors).

You also need to be careful when seeking investment. Investors want their money to be used to grow the business, not spent on consulting fees. Therefore, the amount you spend on business plan writing services (and other consulting services such as legal services) needs to be negligible relative to the amount raised.

The other drawback is that you usually don't own the business plan itself: you just get the output, while the actual document is saved in the consultant's business plan software - which makes it difficult to maintain the document up to date without hiring the consultant on a retainer.

For these reasons, outsourcing the grain mill business plan to a business plan writer should be considered carefully, weighing both the advantages and disadvantages of hiring outside help.

Ultimately, it may be the right decision for some businesses, while others may find it beneficial to write their business plan using online software.

Why not create your grain mill's business plan using Word or Excel?

I must advise against using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write your grain mill business plan. Let me explain why.

Firstly, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is highly technical and requires a strong grasp of accounting principles and financial modelling skills. It is, therefore, unlikely that anyone will fully trust your numbers unless you have both a degree in finance and accounting and significant financial modelling experience, like us at The Business Plan Shop.

Secondly, relying on spreadsheets is inefficient. While it may have been the only option in the past, technology has advanced significantly, and software can now perform these tasks much faster and with greater accuracy. With the rise of AI, software can even help us detect mistakes in forecasts and analyze the numbers for better decision-making.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Moreover, software makes it easier to compare actuals versus forecasts and maintain up-to-date forecasts to keep visibility on future cash flows, as we discussed earlier in this guide. This task is cumbersome when using spreadsheets.

Now, let's talk about the written part of your grain mill business plan. While it may be less error-prone, using software can bring tremendous gains in productivity. Word processors, for example, lack instructions and examples for each part of your business plan. They also won't automatically update your numbers when changes occur in your forecast, and they don't handle formatting for you.

Overall, while Word or Excel may seem viable for some entrepreneurs to create a business plan, it's by far becoming an antiquated way of doing things.

• A business plan has 2 complementary parts: a financial forecast showcasing the expected growth, profits and cash flows of the business; and a written part which provides the context needed to judge if the forecast is realistic and relevant.
• Having an up-to-date business plan is the only way to keep visibility on your grain mill's future cash flows.
• Using business plan software is the modern way of writing and maintaining business plans.

We hope that this practical guide gave you insights on how to write the business plan for your grain mill. Do not hesitate to get in touch with our team if you still have questions.

Also on The Business Plan Shop

• In-depth business plan structure
• Key steps to write a business plan?
• Free business plan template

Know someone who owns or wants to start a grain mill? Share this article with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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• Markets Analysis

Review and evaluate your 2022 grain marketing plan

January is a good time to review and evaluate how well your farm did last year. Here are suggestions on how to first review and then evaluate your marketing plan.

In this era of spreadsheets and QuickBooks accounting, I still like to take a pen and pad and write down trading strategies and ideas for future articles. I find it rewarding to write and then review my ideas as I update my hand-drawn charts. Only then do I pull out my laptop.

• READ MORE: How 2022 lessons can help you plan for 2023 uncertainty

I have been working with farmers to help them make better marketing decisions for more than 40 years. I even have third-generation customers! I have watched some of these farms grow from 320 acres to over 3,000 acres.

The farms that expand and stay profitable do a lot of things right. They know how to maximize yields, how to hire and retain key employees, how to adapt to new technologies, and how to create a flexible marketing plan.

The grain markets have been very volatile in the past year. It has been interesting to see how farmers manage the decisions they make. For farmers with a good marketing plan — and good execution of their plan — the volatile markets can create a sense of pride as prices and profits work higher. On other farms, the day-to-day volatility creates a sense of anxiety: They have sold too soon, and they are frustrated by not hitting "the top."

This corn monthly continuation chart shows the high, low, and close over the past 10 years. The highest high came in August 2012 at $8.44. The low came in April 2020 at $3.00. (This chart shows only the closing price each month so it does not show the highest high and lowest low.) The 10-year high-to-low is $5.44 per bushel. The bottom third of the 10-year range is $3.00 to $4.81. The middle third is $4.81 to $6.62, and the top third is $6.62 to $8.44. With higher production costs in 2023, going into the bottom third of the 10-year trading range will take prices below most farmers' cost of production.

But each year can be a new beginning.

January is a good time to review and evaluate how well your farm did last year. Here are suggestions on how to first review and then evaluate your plan. Grab a pad and pen. (As a bonus, getting this material together now will save you time when you are preparing for your tax appointment in February.)

Start by making a list, month by month, for 2022. For each month, record your grain sales, how many bushels you sold, the futures price and basis the day you sold, and, most importantly, why you made the sale. Be very honest about why you made the sale. This is key to improving your plan next year.

Farmers who struggle with marketing and find that it creates a lot of anxiety — and even family conflicts — will often sell when they panic. Others sell when they need money or make a sale based on something they read on the internet. They are reluctant to make a series of sales as prices move higher because they have FOMO (fear of missing out) about not hitting the top. This sets up panic sales when prices turn lower, especially if the news they read on the internet turns super bearish (as it usually does at the bottom). A lot of these farmers will make only cash sales.

• READ MORE: How Starlink is a reliable internet service for rural America

The farmers who have success in marketing have a plan. Even more important, they use the plan. They control their emotions and have realistic expectations. These farmers are willing to sell as prices go up, knowing that each sale is at a higher profit level. They manage their FOMO.

They still have FOMO, but in a different way: They are not worried about prices going higher, but about what happens if prices turn lower and they are left holding too much inventory. These successful farms usually turn to a combination of marketing tools, including cash sales, hedges, hedge-to-arrive contracts, and put options.

This soybean monthly continuation chart shows the high, low, and close over the past 10 years. The highest high came in August 2012 at $17.94. The low came in May 2019 at $7.80. (This chart shows only the closing price each month so it does not show the highest high and lowest low.) The 10-year high-to-low is $10.14 per bushel. The bottom third of the 10-year range is $7.80 to $11.18. The middle third is $11.18 to $14.56, and the top third is $14.56 to $17.94. As with corn, if prices move to the bottom third of the 10-year trading range, it will take prices below most farmers' cost of production.

Once you complete your review and evaluation, it is time for the next logical question: How do I improve my marketing plan in 2023? Here are three steps.

Step One: Make a marketing team, if you haven't already.

Create a team to share the decision-making process. Involving your spouse, children, or in-laws in talking through decisions is beneficial. It is also likely to reduce your anxiety — and theirs. Building teams is a normal routine in any well-run company. It is even more important in a farm operation, where your marketing team members have a stake — and often a lifelong investment — in the business.

I had to learn this the hard way for my business early in my career. My publishing and brokerage businesses were starting to grow. I had a trusted employee who had to move on for positive reasons. After he left, I wanted his insight, so I called and asked him, "What is it like to work for Al?" After a long pause, he said, "Well, ah ... it is like working for a benevolent dictator." Wow, at least he used the word benevolent. I changed and made an effort to have weekly staff meetings. I sought and used the input from all the team members. It helped me make better decisions.

Step Two: Make time each week to review and update your plan together.

Do this even if it's just you and one other team member. Don't dwell on your marketing during a sleepless night. Instead, sit with your team and talk marketing. On every farm, it takes planning to get the bushels hauled in at the right time. You need to monitor who has the best basis, be aware of how much and what percent you have sold, and know what you still need to price. To do this right, it takes a team. Just the act of saying the plan and goals out loud in your meetings will make it more likely to work. There is a real power in writing down a plan and then saying it out loud. Give it a try.

Step Three: Keep a grain marketing journal.

You need to write why you are making your decisions. Putting a gut feeling into words is very difficult sometimes, especially if that gut feeling is simply panic. But trying to put it into words makes it become more clear to you, whether you like it or not. An important (and sometimes unpleasant) part of this process is being aware of how you are making decisions. That's how you can make better decisions and build a stronger and more profitable farm operation.

Remember that the news is always bullish as prices are going higher and bearish as prices are going lower. Your journal of notes from your weekly team meetings can help you avoid panic sales at the bottom and instead make better decisions in the future. You need to think of your crops like money, because they are.

Final thoughts

I like to teach my Kluis Grain Trading Academy each winter. It is always rewarding for me to see how farmers can change and improve their marketing when they learn and adopt new marketing concepts. A lot of the long-term success of your farm will depend on the financial and marketing decisions you make. Make sure the next generation is learning more each year.

Note: The risk of loss in trading futures and/or options is substantial, and each investor and/or trader must consider whether this is a suitable investment. Past performance — whether actual or indicated by simulated historical tests of strategies — is not indicative of future results. Trading advice reflects good- aith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice given will result in profitable trades.

Al Kluis, Commodity Trader

Al Kluis has been trading grain futures since 1974. Sign up for a free trial to his daily morning email and weekly "Kluis Report" by going to kluiscommodities.com .

Kluis Commodity Advisors 901 - 12 Oaks Center Drive Suite 907, Wayzata, MN 55391

888/345-2855

kluiscommodities.com

Agricultural Business Plan Template

Written by Dave Lavinsky

Agricultural Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their agricultural companies.

If you’re unfamiliar with creating an agricultural business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write an agricultural business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is an Agricultural Business Plan?

A business plan provides a snapshot of your agricultural business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for an Agriculture Business

If you’re looking to start an agricultural business or grow your existing agricultural company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your agricultural business to improve your chances of success. Your agricultural business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Agricultural Businesses

With regards to funding, the main sources of funding for an agricultural business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for agricultural companies.

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How to write a business plan for a agricultural business.

If you want to start an agricultural business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your agricultural business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of agricultural business you are running and the status. For example, are you a startup, do you have an agricultural business that you would like to grow, or are you operating an established agricultural business you would like to sell?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the agricultural industry.
• Discuss the type of agricultural business you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of agricultural business you are operating.

For example, you might specialize in one of the following types of agricultural businesses:

• Animal feed manufacturing: the production and sale of food formulas for farm animals.
• Agrichemical and seed manufacturing: the production and sale of agrichemicals (e.g., fertilizers, pesticides, and fungicides) and seeds to farmers that support the growth of their crops.
• Agricultural engineering: development, testing, and implementation of new agriculture tools and machinery to improve the process for farmers.
• Biofuel manufacturing: the production of energy from biomass.
• Crop production: the process of growing and harvesting a variety of crops such as fruits, vegetables, and grains.

In addition to explaining the type of agricultural business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include reaching X number of harvests per year, the number of customers served, or reaching $X amount in revenue.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the agricultural industry. While this may seem unnecessary, it serves multiple purposes.

First, researching the agricultural industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your agricultural business plan:

• How big is the agricultural industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your agricultural business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your agricultural business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of agricultural business you operate. Clearly, schools would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.  

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other agricultural businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of farmers, wholesalers, and distributors.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of agricultural business are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you make it easier for your customers to engage with you?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a agricultural business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of agricultural company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you produce fruit, soy, or vegetable products?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your agricultural company. Document where your company is situated and mention how the site will impact your success. For example, is your agricultural business located on a small or large farm near your customer base?  And, will you operate one or multiple locations? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your agricultural marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your agricultural business, including scheduling employees, tracking inventory, accepting orders and payments, and meeting with customers.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to reach your Xth harvest, or when you hope to generate $X in revenue. It could also be when you expect to expand your agricultural business to a new region.  

Management Team

To demonstrate your agricultural business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing agricultural businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing an agricultural business, or owning their own farm.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, how many pounds of each crop do you plan to yield each season? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your agricultural business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a agricultural business:

• Cost of farm equipment and supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your farm’s location lease or a list of agricultural equipment and machinery used on your farm.  

Writing a business plan for your agricultural business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the agricultural industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful agricultural business.  

Agricultural Business Plan Template FAQs

What is the easiest way to complete my agricultural business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your agricultural business plan.

How Do You Start an Agricultural Business?

Starting an agricultural business is easy with these 14 steps:

• Choose the Name for Your Agricultural Business
• Create Your Agricultural Business Plan
• Choose the Legal Structure for Your Agricultural Business
• Secure Startup Funding for Your Agricultural Business (If Needed)
• Secure a Location for Your Business
• Register Your Agricultural Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Agricultural Business
• Buy or Lease the Right Agricultural Business Equipment
• Develop Your Agricultural Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Agricultural Business
• Open for Business

Don’t you wish there was a faster, easier way to finish your Agricultural business plan?

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Click here to see how Growthink’s business plan professional services can help you create a winning business.  

Other Helpful Business Plan Articles & Templates

• MyU : For Students, Faculty, and Staff

Grain Marketing is Simple (it’s just not easy)

The 3rd Edition is now available!

Barney Binless and Hank Holder are back and hoping that the third time’s a charm.

Why a 3rd Edition? How about

• 30+ years of data provide a deeper look at grain marketing strategies.
• The analysis now features Iowa average prices.
• Biofuel production is expanding rapidly, and the 3rd Edition considers the need for a new approach to marketing.
• Uncle Buck and Covered Cal are new characters who allow us to explore more options-based pricing strategies.
• Tammy and Tommy Twostep are also new, and they examine the value of marketing from start to finish.

This is not a textbook – a textbook would not present grain marketing plans with celebrity producers like May Sellers and Terry Timer or explore the value of options with Peter Paperfarmer. My characters help illustrate the simple – but not easy – aspects of marketing.

This book is a must-have resource for grain producers and ag professionals with a serious interest in grain markets and pricing strategies.

About the book

The book is divided into five major parts:.

• Five Common Mistakes in Grain Marketing
• Pre-Harvest Marketing Plans
• Post-Harvest Marketing Plans
• Pricing Tools
• Pulling it Together

You will learn

• A different approach to marketing grain
• Five common mistakes in marketing
• How to write a pre-harvest marketing plan
• Price objectives and decision dates in a marketing plan
• Seasonal price patterns before harvest
• How to incorporate technical trading tools into your marketing plan
• How to size-up the market and write a post-harvest marketing plan
• Cash price seasonal patterns after harvest
• Carrying charges and selling the carry
• Price and time driven exit strategies
• Fixed-price pricing tools
• Minimum-price pricing tools
• How to select the right pricing tool, before and after harvest
• How to combine your pre- and post-harvest marketing efforts
• …and much more!

About the author

Edward Usset  serves as a Grain Marketing Economist for the Center for Farm Financial Management at the University of Minnesota.

Working with his colleagues at CFFM and in extension, Ed developed the award winning “Winning the Game” series of workshops. He manages Commodity Challenge, an online marketing education game that uses real-time cash and futures data. In addition, Ed is a regular contributor for Corn and Soybean Digest and Farm Futures, and he teaches “Commodity Markets” and “Futures and Options Markets” at the University.

What is a Grain Marketing Strategy, Things to Know and Consider

Introduction to grain marketing strategy.

As a farmer, you must know two things: your cost of production and the price needed to break even. (If you need to know national averages, you can check them here: Cost Of Production )

Selling grain is a volatile business, and having a strategy may help you avoid random decisions that could impede your operation.

Your goal might be to sell your grain before it hits the bins. You need a team to help you with the decision-making. A team you trust, and you know you can make marketing decisions with. Sometimes, with a good team, the times you will be afraid to pull the trigger could be the best marketing decisions you make.

Your Grain Marketing Strategy Team

1) Software to Calculate it All

There are way too many variables a farmer faces every year to try and have an “intuition” about. You need to know your breakeven, and your goal is to sell above neighboring prices.

You can run an excel spreadsheet, formulas, or one built for you, or you can use Grain Basis software . A program where you can place your costs, play with basis, and know exactly where you stand.

Also, using web-based software (no downloads), you won’t need napkins, paper notes, etc., to remember how much grain you sold, at what price, and when.

And how nice would it be to show your loan officer one sheet and say:

“ here’s the cost, here’s the break-even, here’s the profit. “

Also, the software does not try to convince you to sell your grain. There is only one possible way to sell your grain you’re looking for – the right time and price.

2) A hedging plan using the Futures Markets.

If you want to hedge against price fluctuations, you should consider working with a broker. Grain Basis software can help you with hedging recommendations. Still, working with an experienced commodity broker who can advise you on the best course of action and help in placing orders correctly is also important. An advantage of using the futures market is that it can potentially save money and lower premiums charged by the local elevator.

3) A Loan Officer

A farmer needs a loan officer to approve loans for equipment, supplies, crops, and land maintenance. A good loan officer will try to match your cash flow needs while making sure you repay your loan.

In our experience, there are three things farmers can do to impress a loan offer:

1) Have a full and accurate picture of your cash flow

2) Be organized with your paperwork (the less paper, the better)

3) Have a complete marketing grain plan.

Building rapport with your loan officer based on your farm operation’s efficient marketing plan to sell grain is important. This will help to establish that you can secure cash flow from your lender or, in simple terms, the money you need to continue your passion for farming.

If you’re looking for a team with experience handling the above, Grain Basis can help. The company has top-of-the-line software and market access, and its staff includes former loan officers who understand your challenges. You can get in touch with them to be guided through every step of your grain marketing: https://grainbasis.com/contact/

Grain Marketing is a Long Term and In-depth Endeavor

One of the advantages of applying an objective, coherent, and emotionless marketing plan based on the cash price is that it will provide you with insight and ideas to optimize your cash sales. You will encounter situations where the basis is positive and some years negative; nevertheless, you will be able to navigate the grain sales landscape with a plan and not “your neighbors” advice.

Talking through different scenarios with your Grain Basis consultant will allow you to have alternatives that you might not have considered or, even more importantly, “compel” you to act due to the volatility that the grain markets can experience. Some Years you may decide to sell all your bushels, and some years you will keep some of the bushels.

Grain prices can only go up or down, but the challenge is how they go up and down. Prices could experience different volatility, ranges, and time spent at a certain price. Those are some of the unknowns and quite often very hard to predict. Your job and the crop marketing consultant’s job is not to guess where the market is heading but what to do if the price reaches specific targets. You will know what to do when conditions are good and when unfavorable.

We believe time and experience applying a solid grain marketing strategy beat all intuitive feelings and neighbors’ prediction talk. You will discover your strongest sales and develop a game plan to maximize future opportunities.

Things you should consider when you get your marketing plan going

1) Current Price is King

In our opinion, prices lead the news. And researchers always have to answer the questions of “why?” as in “why did it go up?” and “why did it go down?”. But there isn’t always a “why.” Prices fluctuate as there is an interaction between buyers and sellers.

The current price should be your only indicator to decide on. It is truly the only objective advice you can get.

Do not fall into the “I don’t understand” scenario of prices. For example, the market has a low supply, and it is going down, or has a high supply and continues to rise. The price is the price. It combines biased opinions, psychology, supply, demand, and weather. We are not artificial intelligence machines that can process all this data and arrive at a predictable outcome.

Your marketing should be based on price risk. The price where you cannot reach breakeven. The price you cannot pay your bills. Your goal is to sell above that price.

Further, you need to consider different scenarios of prices; higher prices and lower prices. Based on these scenarios, you could decide what to do or what not to do. This is where your marketing plan starts.

2) Time is of the essence

After you figure out different price targets, your goal is to set dates for the cash market sales. Stick to a schedule you set; otherwise, as we mentioned above, you may fall into a “gut feeling” decision-making that is not always helpful as a long-term strategy.

In addition to selling, you must consider if anything will go to storage.

3) Consider Outliers

Always be prepared for elements of mother nature such as floods, drought, economical-low prices, higher production costs, and transportation costs. These things you do not control but may jump at you when trying to market grain. Despite all your marketing plans, always consider a contingency plan in case variables like that jump at you.

Old Crop Marketing Strategies

Old crop refers to grains that were harvested in the previous season but have not yet been sold. Farmers can sell directly to the consumer (cash market), processors, or distributors while hedging their crops through the Futures & Options markets. Factors affecting old crops are weather conditions, crop yields, storage availability, and transportation.

Old crop marketing strategies for farmers:

Storage and selling later:  Utilize storage for harvested crops and sell later when prices are higher. Advantages include potentially receiving a higher price, but risks include the cost of storage, potential crop loss or degradation, and carrying charges.

Direct marketing:  Many farmers sell harvested crops directly to consumers, such as at farmers’ markets or through CSA programs. Benefits include receiving a higher price, building customer relationships, and getting product feedback.

Selling to processors or distributors:  Many farmers sell harvested crops to processors or distributors, then sell to retailers or consumers. Advantages include a stable crop market and convenience for crops with short shelf life.

Note:  Local elevators or ethanol plants can also be a marketing option for farmers. The most effective strategy will depend on specific crops, market conditions, and the farmer’s resources and preferences.

Pre-harvest Marketing Considerations

Your focus should be on the following:

• It involves the grain sale before they are harvested
• It helps reduce the risk of price fluctuations and over-planting by producers
• Secures a buyer in advance via grain contracts
• Allows farmers to receive better prices for their crops
• Enables harvest plan, storage, and transportation logistics

Post-harvest Marketing Considerations

• It takes place after the harvest.
• It gives farmers a chance to evaluate the quality and condition of their crops.
• Farmers can adjust their marketing strategies and pricing accordingly.
• The post-harvest period also provides more opportunities for storage and transportation,
• Allows farmers to take advantage of market conditions and fluctuations.

Futures contracts as Part of Your Marketing Strategy

Farmers must set up their businesses to deal with unpredictable weather, changing market conditions, and different supply and demand levels worldwide. First, farmers can protect grain prices by trading futures on the grain markets. Then, before taking their crops to market, they can “lock in” their profits by selling a futures contract if they think commodities like wheat, corn, and soybeans have reached their targeted profit levels. With this strategy, farmers ensure they will achieve their profit target no matter what happens in the market following the harvest.

• In conclusion, a Grain Marketing Strategy is crucial for farmers to succeed in the volatile grain-selling business. To have a strategy, farmers need a team that includes software to calculate costs, a hedging plan using the Futures Market with a commodity broker, and a loan officer.
• A good loan officer is impressed by a complete cash flow picture, organized paperwork, and a comprehensive marketing grain plan. Grain Basis offers a team with experience and top-of-the-line software to help farmers navigate the grain sales landscape.
• A solid grain marketing strategy will provide insight and ideas to optimize cash sales and maximize future opportunities. The current price should be the only indicator to decide as prices fluctuate due to a combination of factors. In our view, the time and experience of a solid grain marketing strategy will beat intuition and neighbors’ predictions.

Grain Marketing 101: The Fundamentals of Grain Marketing

Posted on June 24, 2021

When it comes to selling and marketing their grain, Canadian producers are faced with a variety of options. Producers must consider all of their choices to formulate the best strategy for their farm. But, in order to do so, they must first understand grain marketing as a whole and how they can use it to their advantage.

While grain marketing is not an entirely new idea, many producers may not be aware of the advantages of developing a personalized marketing strategy tailored to their unique needs. The key to success is being active in the grain marketing plan, re-evaluating your steps and understanding market information and analysis. This article will provide insight into the basics of grain marketing and help get you started on your journey.

What is Grain Marketing?

Grain marketing is the technical art of selling grain. It begins with a series of informed decisions – when to sell, for how much, to who – and subsequent actions that turn your grain into a profit. Through the lenses of data, profitability, and business sustainability, smart grain marketing considers market analysis as well as marketing decisions, and understanding the difference between the two is key.

Market Analysis focuses on external factors: macro trends, local prices, and things that impact supply and demand (weather, politics, global trends). This includes understanding where prices come from and what the signals might mean to each crop in your marketing plan.

Marketing decisions are 100% about your farm and focus on internal factors: risk management, cash flow needs, management styles, individual business goals. They are informed decisions that allow your farm to make a profit and build a sustainable legacy.

What are the Benefits of a Grain Marketing Plan?

Developing and implementing a smart marketing strategy is one of the first steps towards establishing a profitable farm business. A marketing strategy will help you make reasoned marketing decisions, manage price risk, and improve market returns. Like anything in farming, a plan helps. It’s important to manage the risk you face and take advantage of opportunities that come up. Having a good understanding of your marketing can and should set you up for long-term success.

What is Involved in a Grain Marketing Plan?

Analyze the market Gather unbiased market information from credible sources to make smart grain marketing decisions. Monitor market conditions to make a sale when pricing is strong.

Manage the risk Choose crops with the greatest income potential within the crop rotation used and understand the risk associated with growing that crop.

Understand your position After calculating your benchmark sales prices, you’ll have a solid understanding of where you stand in an ever-changing market.

Use your strategies and tools Once you’ve identified your target price and position, you can develop marketing strategies that work with your goals and preference.

Set Timelines and Evaluate. Develop goal breakdowns and annual timelines to keep your plan on track. Continue to review your plan and adapt it as fit.

For a full breakdown of a sound grain marketing plan, check out our recent blog post on the topic here .

Who is Involved in a Grain Marketing plan?

Producers Simply put, grain producers are the cornerstone of the grain market. You use a combination of knowledge, experience, and technology to grow and sell your crops.

Advisors and Analysts Working with an unbiased grain marketing advisory team can not only educate you about grain marketing but also help you capitalize on every opportunity that comes your way. Your grain marketing advisor is an expert at selling your grain and works to help you make the best financial decisions possible. FarmLink’s analysts have an in-depth and data-driven approach to understanding the complexities of the market. The two work together to assist you with the marketing aspect of your farm while you can focus on what’s most important to you, your job, and your strengths.

Buyers Grain is usually purchased by feed yards, mills, and ethanol plants. Producers normally store their grain in a grain elevator or on the farm until it’s time to sell it after harvesting their crops.

Storage and Transportation Grain elevators are usually located along railways or highways to facilitate transportation. They may also be near shipping ports. Harvested crops are transported to elevators by farmers. Before storing the grain, the operators weigh and test it. They inspect the grain for debris, such as stalks, and determine moisture levels. They don’t want grain that rots or molds prematurely, destroying the rest of the crop in storage. When producers sell their crops or a deal expires, the grain is transported to its final destination by trucks, trains, or ships.

Why is unbiased information and advice important?

Regardless of where you get your information or receive services from, you should always get an unbiased opinion from a broker, dealer, or grain company that isn’t trying to persuade you to sell your grain – this is a safe way to ensure that you’re selling your grain at the right time and at the right price.

It takes time to adapt to the grain marketing process . But with the right advisory team beside you, your confidence will grow more and more every day. You’re not just paying for the expert service; you’re paying for the type of peace of mind that only a highly trustworthy, working relationship can provide.

Why does grain marketing need a long-term game plan?

Strong grain marketing plans aren’t intended to get the best deal on every grain sale. It all comes down to long-term results. And, to achieve long-term sustainability, you must continually review and change your strategy. Examine where you might have done better or what your strongest selling points were, and formulate tactics to close any gaps and maximize future opportunities.

A FarmLink grain marketing advisor would be happy to talk in more detail about the benefits of grain marketing and how we can be an asset to your team. Start achieving your financial goals, and build your legacy on solid ground.

Connect with an Advisor

Personalized sales recommendations: What makes GrainFox different?

How to use non-ag markets to predict your crop value & make strategic decisions.

The Grain Business IS the Relationship Business

Roger Gattis May 27, 2014

As GRAIN MERCHANDISERS, we are uniquely positioned as we can use our skills to take and buy grain ANYTIME that it is convenient for the producer, and simultaneously can perform the duty of a supplier and seller of grain ANYTIME that is demanded by the end user, AND make great margins in the process. This WIN-WIN-WIN relationship doesn’t only apply to logistics, but also with regards to helping the farmer and end user each achieve their pricing goals. As practiced GRAIN MERCHANDISERS, we have the ability to pay the producer a high cash price that meets his profitability goals AND at the same time offer grain into the user market at price levels that enable them to operate their businesses profitably, all the while realizing our margin goals in the process. This is an outcome that cannot be reached without an expert GRAIN MERCHANDISER having a role in a successful grain marketing and delivery system.

The effective use of GRAIN MERCHANDISING techniques lead to a relationship of TRUST between you as the grain merchant and both your upstream farmer customer as well as your downstream end user customer. When the producer trusts that you are working for his interests and not competing with him on price, you may become his first and only call to handle his business. Likewise, when your buyer customer trusts that you will be able to source grain for him based upon his needs and that you have a realistic knowledge of values, you may also become his first and only call as well! GRAIN MERCHANDISING is the vital link in not only the grain supply chain, but in the relationship chain of trust that our industry relies so much upon.

The best case scenario for the tried and true GRAIN MERCHANDISER is paying the farmer the highest price available for his grain when he wants to sell AND selling the end user the lowest priced grain that he can find when he wants to buy.

If you are questioning the sanity of the preceding statement, or would like to know how to develop and hone the skills necessary to operate your grain business in a WIN-WIN-WIN style, check out our online grain merchandising courses for every type of grain trading education you need.

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Grain Business Cost, How to Start, Profit, Registration | SkillsAndTech

India is an agricultural country. 70% of India’s population is engaged in agriculture. Agriculture is the main occupation of the people in the village. India’s agriculture is based on monsoon. If the monsoon is good then agriculture is also good. Many types of cereals are grown in India like wheat, rice, pulses etc. Most of the wheat is produced in the state of Uttar Pradesh, India.

Only 2% of wheat is exported to foreign countries, 98% part remains inside India. Wheat and rice are the cereals that people like to eat the most. Pulses are most needed in the homes of the people of India. People like to eat pulses more. Many types of pulses are grown in India like urad dal, rajmah, moong, masoor, tur, gram dal etc. Grain is one of the great needs of human beings.

Without food, man cannot survive. If a person wants to do grain business, then he gets more benefit in it. Whatever happens, the business of grain is such a business that never stops because without food it is impossible for a human being to live.

Man can survive without other things. But not without grains. When we start any business, we have to face some difficulties in it. Have to work hard. Sometimes failure has to be accepted. Cereal business is the best business. Whether one is rich or poor, everyone needs food grains to survive.

Table of Contents

Choosing the Right Location for Grain Business

The first place is selected for starting the business. Whether to start the business from home or to buy a separate place somewhere. To start a business, we need a warehouse. We should make warehouse in such a place where vehicles can easily reach. There should not be any problem in bringing and carrying food grains.

Be financially strong

A lot of money is needed to start a business. In business, sometimes there is loss instead of profit. For business we also need building, land, machinery, furniture etc. Therefore, to start a business, it is necessary for the first person to have money management.

Direct Contact with Farmers

If we want to do grain business, then we should contact the farmers directly. Farmers will give food grains to us at cheaper prices and we can earn profits by selling them at higher prices.

GST Registration and License Required

We also need the GST number to do the business of food grains. There is no GST on loose pulses and loose flour, 5% GST is levied on selling good quality pulses and branded flour. The business of food grains is related to food, so it is necessary for the seller of food grains to take food license, apart from this it is also necessary to take trade license from Municipal Corporation, Municipality etc.

Proper arrangement of storage of food grains

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Before starting the grain business, it should be kept in mind that whether there is enough space to keep the grains or not. This requires a large warehouse. The size of the warehouse should be large. In India, the farmer works very hard, the grain is also abundant, but due to the lack of open grain of the farmers, many times it gets drenched in rain and gets spoiled, which causes a lot of loss to the farmers.

Cleanliness Attention

There should be proper arrangement for storing grains. The care of cleanliness It is very important to take care of the permanent in the grain warehouse. The grains should be kept neatly in sacks. Rats are the biggest enemies of grain. If you do not take care of cleanliness there, then rats spoil the grain, on which the grain is damaged.

Computer Knowledge

Nowadays is the age of computer. If you have knowledge of computer then you can increase the business of grains through computer also. On the computer, you can promote your business by creating a separate website of your business in your name. Dealers can talk to you about business online. Nowadays payment is also done online so that you will not have much trouble. You can enter your business information online.

Cereal Consumption Information

Before starting a grain business, you should know where the maximum grain is consumed. One can go to any hotel or restaurant to find out how much grain they need. You can go directly to the hotel and make an offer so that they buy the food grains from you. If they are given the facility of delivery, then they will be ready in such a way that you yourself are delivering food grains to their hotel, the more you have contact with the people, the more sales will be there and the profit will also be there.

Benefits of Grain Business

Government Ration Distribution Shop

Pani Puri Business

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•  Grain is the most important thing for every person. Everyone has to buy Mahanar whether it is cheap or expensive. Therefore, profit is the only profit in this business, so there is no scope for eating.
• By  buying the grain directly from the farmers at a lower price, we can earn profit by selling it at a higher price.
•  Business of food grains can be done in both urban and rural areas.
•  Grain business is a business that can be run even in emergency situations. Even though all the shops are closed, the supply of food grains continues because food grains are very important for survival.
•  Grain business is such an easy business that not only men but women can also do it. Due to this women get the means of employment and they become self-reliant.
•  To start a grain business, not much money is needed. It can also be started at low cost. For this a godan is required where the grain can be stored properly.

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8 tips for doing business with European buyers of grains, pulses and oilseeds

If you want to enter a new grain, pulse or oilseed market, it is key to understand how people in that market do business. Since you will be dealing with people from different countries in Europe, you will have to adjust to their culture, requirements and expectations. It is important to be selective when choosing different partners and countries for your market entry, and show excellent compliance and reliability.

Contents of this page

• Business culture: Use a personal approach
• Your sales pitch: Create and explain your unique proposition
• Quotation: Know your buyer before quoting your offer
• Samples: Send representative samples and laboratory tests
• Support agencies: Find collaboration of support agencies
• Building business relations: Try to build long-lasting relationships
• Compliance: Keep your certifications up to date and comply with legal requirements
• Export strategy: Be selective and focused when targeting your export market(s)

1. Business culture: Use a personal approach

The products in the grain, pulse and oilseed industry are diverse and so are their different business cultures, ranging from a traditional business culture in the main commodities to a more personal approach in specialty ingredients and products that require more attention in sourcing and quality control.

Risk avoidance

A common denominator in the European trade of food ingredients is the risk avoidance by buyers (see also building relations below). Quality assurance is a big issue, and buyers do not want to risk receiving a product that does not comply with the market standards. One of your main tasks is taking away that risk. It is important to gain trust with a buyer relation in Europe, and this is best realised by a personal approach and by being open and honest about your intentions. Honesty will get you more information and time from your business relation.

Personal contact for niche products

Large commodity buyers will use more formalities such as purchase contracts and supplier’s declarations, sometimes without much interest in the person behind the product. For products that require extra attention in terms of traceability, food safety and quality, you can personalise your approach much more. Buyers will often want to see the production facilities for themselves and meet the person behind the product. Personal contact helps your buyer to mitigate risks, for example when the product involves many small farmers (such as quinoa, teff, fonio), or is difficult to source (such as organic chia seeds).

Communication in different business cultures

A good communication style is necessary to avoid misunderstandings. However, each European country is different. Be flexible and adapt to the circumstances. Understand the business culture and try to adapt to their way of doing business. This does not mean that you have to go along with every wish of your buyer, but to follow their business etiquette.

For example, in Germany, the business culture is formal and hierarchical, and you should focus on the facts and use rational arguments. Rationality is also an important part of Scandinavian business culture, although their style of doing business is much more informal and done through consensus. In the Netherlands, people will appreciate a direct communication style, while in the United Kingdom, indirect communication is considered most polite. In the Mediterranean countries, business partners value their relationships and spend more time in maintaining them.

• Keep your first contact moment short and to-the-point. The goal of your first contact moment is to create initial interest and secure a follow-up. First contact can be an introduction by email or a short phone call. Do not give up too easily. People have different ways of turning you down. This does not mean that they are uninterested – it may be because of a lack of time or low priority.
• Make sure you find a decision maker, or at least someone that is involved in purchasing your product. In some cases, this will be one of the purchasers, but in the more formal companies, your product will be approved by the top management.
• Find out what kind of company you are dealing with and what needs they have. Try to meet in person to get to know your counterpart and exchange further information. Be yourself and help your potential buyer in taking away the risks of doing business with you by showing the good conduct of your company. Ask if they have questionnaires for new suppliers and/or if they want to visit your establishment.
• Be on time for meetings. Punctuality is important, and meetings are often scheduled weeks in advance and have a clear objective. Greet with a firm handshake and make eye contact.
• Gain an understanding about how to do business in Europe by reading about the different European business cultures in Passport to Trade 2.0 or their etiquettes in the Kwintessential Etiquette Guides .

2. Your sales pitch: Create and explain your unique proposition

Your value as a trade partner is mainly determined through compliance and price. In the trade of large commodities, businesses tend to be traditional and you will be dealing with a structured and efficient supply chain. Products that are more specific usually require more paper work, quality control and negotiation, which provides more room to stand out as a supplier.

Explain why you are a reliable supplier

Instead of telling your potential buyer that you are competitive and that you are compliant with product requirements, explain what makes you a reliable supplier and how you manage your business. This creates trust and gives your potential buyer a positive impression on reliability and seriousness. Tell your buyer about your organisation, your track record and show your production process. Certifications are important to add in your marketing, but your company values and how you apply them in practice are more personal and therefore add more character to your offer.

Find and use your unique selling points

Thoroughly analyse what makes your company different from other suppliers. What are your unique selling points? Try to differentiate and link your proposition to the needs of your potential buyer. For example, show your work with small farmers when targeting companies with fair-trade products; mention your production power to ensure supply reliability to large buyers; separate production and processing lines for specialised buyers of gluten-free grains; adopt organic farming for typical health-related grains and seeds; or add value with basic processing for specific buyers.

For example, the Fair Farming Foundation of Nature Bio Foods Limited in India successfully helped to market fair-trade Basmati rice from a large group of small producers to Europe. By organising the supply in cooperation with Reismühle Brunnen , a division of the Coop Cooperative, the foundation managed to get their product into European supermarkets. Another example is the Designation of Origin and brand marketing for Royal Quinoa (“Quinoa Real”) in Bolivia, which has given producer associations such as Anapqui and Cabolqui the advantage to market a specific quinoa variety from a specific geographical environment. This Royal quinoa has successfully been introduced to the European market with brands such as the French Priméal .

Figure 1: Finding unique selling points

Figure made with wordart.com  

• Highlight what makes your product special for the international market, including aspects with a competitive advantage or with which you can attract specific buyer groups. For example, a separate gluten-free processing line for amaranth, quinoa, teff and fonio, superior quality or high-grade chickpeas or sesame, or chia seeds with a high level of omega3 fatty acids.
• Show your social engagement. If you have activities that benefit your farmers, families and communities such as educational programs or health services, talk to your buyers about them and promote them on your website or social media.
• Apply basic processing to your products. While most grains and pulses are traded as bulk products, basic processing into grain flakes or flour (for example quinoa flakes or lentil flour) can give you a competitive advantage with a select number of buyers.
• Specialise in specific products or market channels, for example an aromatic or specialty rice varieties for the ethnic market. Specific focus and experience can improve your reputation as a supplier and help your company stand out from generic suppliers.

3. Quotation: Know your buyer before quoting your offer

Well-known buyers regularly get offers from potential suppliers with price information, and many buyers will tell you to email your quotation after your first introduction. However, your buyer is not looking for a price, he is looking for a good and reliable deal. Whether this deal is with you depends on your relation to the buyer and the level of trust you have gained.

Do not make ‘price’ your only selling point. Realise that before becoming a supplier, you will often need to fill in forms and send copies of your certifications. Price quotations will merely provide the buyer with market information and potential input to re-negotiate his deal with his preferred supplier.

For higher volumes or long-term contracts, you can decide to offer more competitive prices and secure a longer relationship. When you are working with products such as wheat, maize or soybean, the prices are largely determined by the international commodity exchange market. In this case, it is more about the moment at which you sell than your negotiation skills, either through future contracts or on the spot market, for example.

Know your buyer

Know your buyer when you are sending a quotation. The buyer is more likely to accept your offer if you have met them before, for example at a trade fair, or at least after he has shown genuine interest in your company. Also try to get more details of their needs when asked for a quote. Find out what your buyer considers most relevant and emphasise this in your quote. Hard selling techniques, such as sending unsolicited quotations, often do not work.

Information to include in your offer

When sending your quotation, be to-the-point and be complete in your information. See table 1 as an example of which information you can include in your offer. Make sure you are also familiar with your buyer’s purchase conditions, if they have them – see for example the purchasing conditions of LDC for the EMEA region . Always make sure you get your offer confirmed and signed.

Table 1: Example of information to include in your quotation

• Before sending a quote, know the buyer and their needs. Ask questions on what is important to them and personalise your quote (Dear Mr/Mrs <last name>; if your business relation addresses you with your first name, you can do the same)
• Try to make long-term deals with your buyers by making it interesting for them to negotiate multiple shipments. This way, you get commitment from your client, but make sure you can complete your part of the offer as well.
• Help your offer stand out by highlighting your strengths or unique selling points. Be flexible in your terms of delivery and packaging.
• Include the technical product data in your offer to avoid different expectations.

4. Samples: Send representative samples and laboratory tests

Samples are a good way to show the quality of your products and your compliance with the market requirements. When your buyer asks for a sample, make sure the sample is well-packaged and representative for the lot you have reserved for the particular buyer. It is useless and even considered fraudulent to send samples that do not correspond to the quality of the rest of the lot.

A representative sample is generally taken by trained people and from different parts of a lot. You can use an independent agency such as SGS or Bureau Veritas to take the sample to assure it is done properly and according to standards (such as ISO 7002 ).

For sampling you can take the following summarised steps:

• Defining sample: Define the product specifications and sample size your buyer is looking for and select the product lot.
• Sampling: Take the sample and register it (make it traceable to the right lot)
• Adding data: Add a technical data sheet with a detailed product description and parameters on analytical, nutritional and microbiological properties.
• Labelling: clearly state it is a sample with negligible value (for example by adding a pro-forma invoice with zero value and stating it concerns a ‘sample for testing or trade promotion purposes’ to claim exemption from import charges.
• Packaging: Package and seal the sample properly (clearly state it is a sealed sample so customs do not open it).
• Confirmation: Confirm whether the buyer has received the sample and follow up on it.

When you (also) share a laboratory test to measure residue levels, make sure the test is done by an accredited laboratory. Be aware that testing methods and results can vary between laboratories and countries. Therefore it is best to have samples tested by the buyer as well, or by a their laboratory of their preference.

• Read the FAO General Guidelines On Sampling to implement sampling procedures and selecting a sampling plan.

5. Support agencies: Find collaboration of support agencies

Being part of an export support programme gives you access to trade assistance, trade fair promotion, export training and sometimes financing for certifications. These activities increase your chances with potential buyers. The examples below are European organisations that support exporters in developing countries, but you can also check in your own country if there are support organisations.

Centre for the Promotion of Imports from developing countries (CBI)

Centre for the Promotion of Imports from developing countries (CBI) provides small and medium-sized enterprises with market intelligence and trade support in export coaching programmes. The tailored programmes also include training on doing business in Europe. You can find relevant projects on the website.

Import Promotion Desk (IPD)

Import Promotion Desk (IPD) establishes contacts in the European Union for exporters from partner countries and provides them with market information and capacity building. One of the sectors they operate in is natural ingredients , which includes grains and seeds (quinoa, amaranth, rice) and pulses (kidney beans, pinto beans, white beans, peas).

International Trade Centre (ITC)

International Trade Centre (ITC) is a development agency for sustainable trade with publications and an SME Trade Academy that provides online courses (some are free of charge). Courses such as ‘Export Sales and Negotiation’ and ‘Helping SMEs Generate Export Business’ may be relevant if you want to develop yourself as an exporter of grains, pulses or oilseeds.

• Check the current and upcoming projects of CBI . See if any of these might be interesting for your company.
• Contact IPD if you think their services match your needs in increasing your knowledge on doing business in Europe.
• Subscribe for free or paid online courses with the ITC SME Trade Academy .
• Find Business Support Offices (BSOs) in your country and see what they can do for you. Many government agencies also offer space in country pavilions at major trade fairs in Europe.

6. Building business relations: Try to build long-lasting relationships

Making the effort to build strong and long-lasting relationships is critical to remaining relevant in the market. In order to realise this, you will have to use your networking skills and face-to-face contact.

Do not expect to get orders on the first meeting; this can take a couple of months. Instead, build trust over a longer period of time, be patient, keep your promises and be honest. Showing reliability and consistency over time will help convince your buyer of your value as a supplier. Be aware that buyers can sometimes be opportunistic, in the sense that they will only buy your product when it is convenient for them.

Good communication and problem solving

Once you have established your first buyer relations, make sure you maintain efficient communication by responding quickly to emails. Cooperate and think together on how to solve problems or benefit together from market opportunities.

Prove to be reliable and respect agreements

Once in business, you want the business relation to continue. That means you have to respect your agreement and supply according the deal you have closed. You must not change the conditions or the agreed price once they are established, even when market prices have increased. Your buyer expects you to supply the quality and price that you have agreed on, just as much as you expect your buyer to pay for the product according to the contractual obligations.

Preferential treatment

In a later stage, you can choose to give preferential treatment such as offering better payment terms, for example by providing credit and open account selling (goods are shipped and delivered before payment is due), or explore cooperation in new projects.

• Invite your potential buyers and plan on-site visits to your farm and facilities. It is a good way to get to know each other better and give your buyer a better impression of your company and its capacity to export the required quality and volume.
• Implement good after-sales service and be proactive in your communication. The way that you communicate with your buyer is key to maintaining a good business relationship: Inform your client proactively about any possible delay or problem, check if the product has arrived and if the quality is as expected. Ask what you can do to further improve your service.
• Take any quality issue or claim from your buyer seriously and help investigate the source of the problem. Solve the problem together, even if it is not a mistake on your part.
• Make it a habit to reply quickly and consistently to emails, phone calls or any other form of communication. Not getting back within one business day shows lack of interest. Use several communication tools such as a direct mobile phone, personal email address, WhatsApp and Skype so you are easy to reach for your business relations.

7. Compliance: Keep your certifications up to date and comply with legal requirements

Compliance with European quality and safety standards is a must when doing business. Make sure to keep your certifications up to date and regularly discuss new developments with your buyers. In regular business relations, you are expected to continue your good practices and look ahead for new requirements rather than downgrading your current level.

For quality and food safety, HACCP, ISO22000, BRC and IFS are the most important standards in grains, pulses and oilseeds. For environmental and social issues, individual company standards are often used, but general standards such as GlobalG.A.P., amfori-BSCI, Sedex, Ethical Trade Initiative (ETI) and Rainforest Alliance may be used as well. Certifications such as organic, Fair Trade, non-GMO, gluten free, halal and kosher open the door to specific niche markets.

• Keep your records up to date and send the annual renewal certificates to your clients before they are due.
• Show that you care about the environment by implementing good farming practices. For example, promote the programmes that you implement at your farms related to crop rotation, integrated pest management, waste management, reforestation and carbon footprint reduction.
• Find out what types of certifications are most relevant for you and your target markets. Check the CBI study on buyer requirements for grains, pulses and oilseeds and the ITC Standards Map .

8. Export strategy: Be selective and focused when targeting your export market(s)

How you manage your sales in a foreign country depends on your company and your market entry strategy, and must ideally be defined before you start offering your product. But you must also remain flexible, because the reality may be different from your expectations and export strategies will often take further shape over time.

The main decisions you have to make are: what you will be selling, how, where and to whom. First make sure you have a clear product focus. Take on the products that you are really good at in terms of volume and quality. For buyers it is impossible to understand your proposition when you offer too many different products.

You have the option to sell indirectly, for example through a broker, or do business directly with importers, processors or even food brands and retailers. The more direct your sales, the more resources and local marketing it will require. The type of buyer can also vary in size, specialisation and market segment. Remember that buyers may select you as a supplier, but you can also try to select the type of buyer that fits your company’s ambition.

Start small: the European market is very diverse and large, and it will be very difficult to enter several countries at once.

• Choose the countries that offer the best opportunities for your product. Use the CBI product studies for different types of grains, pulses and oilseeds . Also consider the countries that you are most familiar with, possibly through existing trade contacts or because they speak a language you master well.
• Make potential buyer lists and prioritise. Select buyers according to your profile (for example: buyers with contacts in the bakery sector for ancient grains, or specialised buyers of organic ingredients or grains and seeds with health benefits, or buyers with extra attention for social responsibility). Use trade fairs to meet these companies.
• Decide the level of integration you want to have with your supply chain. With trusted partners, you can work on consignment basis or choose to organise your own warehousing in Europe. Let your marketing budget and financial power be decisive factors for supply chain integration.

Read our Tips for Finding Buyers and Tips for Organising your Export , these can help you further understand how to enter the European market and what it takes to become a successful exporter to Europe.

ICI Business carried out this study on behalf of CBI .

Please review our market information disclaimer .

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The moral aspect of pulse trading is important. Usually importers have been around for several decades and they have factories and delivery terms to respect. So buyers look for reliable and trustworthy business partners. A supplier is expected to respect his obligations in the same way that a buyer has its obligation to pay. A contract must be respected despite the price fluctuations. Henk van Leeuwen - commercial director Cogeser

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