Foothill Farming
University of California
Foothill Farming

Marketing Risk

What Is Marketing Risk?

Marketing Risk Icon

Anything that leads to uncertainty about costs, prices and demand for your product. Marketing risk derives from price risk, product quality, and market availability.

Maintain your knowledge of markets for your products, so you understand your risks well and both mitigate and create contingency plans for them.

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Sources of Marketing Risk

  • price risk
  • loss of market access
  • loss of marketing power due to lack of knowledge 
  • improper or lax record keeping 


Some Questions to Ask to Assess Your Marketing Risk

  • Is my knowledge about markets and marketing tools up to date?
Marketing Plan:
  • Do I have a current marketing plan? Does it cover the entire calendar or crop year?
  • Are all my crop and/or livestock enterprises covered in my plan?
  • How much risk am I comfortable with regarding my marketing options and plan?
Cash Flow:
  • Do my marketing plans account for impacts on other parts of my operation? For example, does income from marketing cover cash flow needs?
  • Have I calculated production costs and estimated yield to determine my break-even price?
Alternative Marketing Tools:
  • What are the potential costs and returns of alternative marketing strategies?
  • Will using a particular marketing tool enhance my income, reduce my risk, or both?
  • Should I seek marketing support or professional marketing services?

Source: USDA Risk Management Agency. "Introduction to Risk Management: Understanding Agricultural Risks." Revised December 1997

This information made available due to a grant from the USDA Risk Management Agency.

Tools for Mitigating and Planning for Marketing Risk

  • Develop a marketing plan that relates to your other planning documents
  • Perform regular market analysis
  • Perform regular customer research
  • Price your products correctly for your markets and efforts
  • Explore alternative marketing strategies, alternative marketing organizations, and value-added ventures
  • Develop a contingency plan

Remember: It's important to choose the tools that are best for you, your level of risk tolerance, and your operation.



General Resources:
Marketing Plans:
  • Developing Your Marketing Plan - UC Davis Small Farm Center. Contents of a marketing plan, performing market research, and strategies for maximizing your market potential.
Managing Cash Flow: Alternative Tools:



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