Potpourri Archives - Page 1941 of 1951

God Made a Farmer: A Lesson in Selling

If you watched the 2013 Super Bowl, you probably saw the Dodge commercial, God Made a Farmer.

In short, the commercial was a montage of pictures of American farmers with Paul Harvey talking in the background. He said:

And on the eighth day, God looked down on his planned paradise and said I need a caretaker — So God made a Farmer.

God said I need somebody willing to get up before dawn, milk the cows, work all day in the field, milk cows again, eat supper then go to town and stay past midnight at a meeting of the school board — So God made a Farmer.

God said I need somebody willing to sit up all night with and newborn colt, and watch it die, then dry his eyes and say maybe next year. I need somebody who can shape an axe handle from a persimmon sprout, shoe a horse with a hunk of car tire, who can make a harness out of hay wire, feed sacks and shoe straps, who at planting time and harvest season will finish his forty hour week by Tuesday noon and then, paining from tractor back, will put in another 72 hours — So God made a Farmer.

God said I need somebody strong enough to clear trees and heave bales, yet gentle enough to wean lambs and pigs and tend to pink combed pullets; who will stop his mower for an hour to splint the broken leg of a meadowlark. — So God Made a Farmer.

It had to be somebody who’d plow deep and straight and not cut corners; somebody to seed, weed, feed, breed, and rake and disk and plow and plant and tie the fleece and strain the milk and replenish the self-feeder and a hard week’s work with a five-mile drive to church.

Somebody who would bale a family together with the soft, strong bonds of sharing; who would laugh and then sigh, and then reply with smiling eyes when his son says he wants to spend his life doing what dad does — So God made a Farmer.

The ad ended simply with a picture of a Dodge truck in front of a farm with the text:

“To the farmer in all of us.” Then the screen faded to black with nothing other than the Dodge Ram logo displayed.

People I know raved about it. They loved it. They emailed it around to each other, posted it on each other’s Facebook walls, and re-Tweeted the link.

And just think: They did this all for a car commercial.

The question is: Why?

What made people care? And what made this commercial so different than the thousands of others they ignore? What called them to action?

See, if the God Made a Farmer commercial was being ignored like all the others, it would have (in a nutshell) sounded like this:

We are Dodge and we make great trucks.
They are perfect for farmers and the working man.
Want to buy one?

Give me a break. How inspiring is that?

But remember back, how did the commercial actually sound:

We believe in the value, virtue, and character of the American farmer.
We do so by making trucks that help them.
Want to buy one?

Now! That is more like it.

The reason that the second sounds better than the first is that people are called to action not when you throw features and options at them, people act when they have a shared belief.

People that I know, who were moved by the God Made a Farmer commercial, were moved because they are in and around farming and ranching. They know personally the man that is up before dawn, working all day, sitting up all night with a new colt and holding it while it dies – the man who is honest and true, and honored when his son turns out the same way. He is their father, brother, uncle, or best friend.

See, the Dodge commercial God Made a Farmerdid not explicitly try to sell you anything.

That is right. Watch it again. And let me say it again: The commercial did not ask you to buy something.

Sounds crazy for a commercial, right? But, while the commercial did not ask you to explicitly buy something it did, however, invite you to belong to something.

This way of marketing was articulated and made famous by author Simon Sinek in his book, It Starts with Why, and later by his hit video on TED.

Sinek says over and again, “People don’t buy what you do — They buy why you do it.”

He goes on to explain how belief drives behavior:

“These are the people who stood in line for six hours to buy an iPhone when they first came out, when you could have just walked into the store the next week and bought one off the shelf. These are the people who spent 40,000 dollars on flat screen TVs when they first came out, even though the technology was substandard. And, by the way, they didn’t do it because the technology was so great; they did it for themselves. It’s because they wanted to be first. People don’t buy what you do; they buy why you do it and what you do simply proves what you believe. In fact, people will do the things that prove what they believe. The reason that person bought the iPhone in the first six hours, stood in line for six hours, was because of what they believed about the world, and how they wanted everybody to see them: They were first. People don’t buy what you do; they buy why you do it.”

See it now? Behavior is driven by belief, not convenience, or options, or anything else.

Quoting Sinek again: “The goal is not to do business with everybody who needs what you have — The goal is to do business with people who believe what you believe.”

That is why some people were moved by God Made a Farmer. The marketing message was: We believe what you believe. Want to join us?

That is how you inspire people with a 30-second car commercial.

That is how to sell a Dodge truck.

The Price of Cotton: How Does The Dollar Effect It?

As I have said before, the value of the dollar matters.

The value of the dollar matters in a grand sense because of purchasing power. The pertinent question being: Does my dollar buy more or less goods and services today than it did yesterday?

As consumers, it is natural that we would want the value of the dollar to increase. Having a more valuable dollar, year in and year out, is like getting an automatic raise every year. Last year we were able to afford a fictitious 20 units of goods and services – this year we are able to afford 25 units.

However, the perspective of the consumer is not my issue. My issue is the contradiction in the value of the dollar for cotton growers. Specifically: Should cotton growers prefer an increase in the value of the dollar or a decrease in the value of the dollar?

As consumers of nearly every good and service that the modern economy has to offer, as well as consuming ever expensive farm inputs – I would think that cotton growers should favor a higher value dollar. However, and I have this discussion with growers, both large and small, all the time;

In regards to their crop, American cotton growers should favor a lower value dollar.

The reason for this is that as the dollar is worth less, it takes more dollars to buy the same amount of cotton – i.e. prices rise. Also, the majority of cotton grown in the U.S is exported overseas. As late as the 2011/2012 growing season, when U.S. cotton growers produced approximately 15.6 million bales – about 11.6 million of those bales were exported.

This matters because foreign buyers must pay U.S. dollars for U.S. cotton. And when the value of the dollar is higher – relative to other currencies – it makes U.S. cotton more expensive to foreign buyers. And the more expensive it is for foreigners to buy U.S. cotton, the lower the dollar price of U.S. cotton must fall to compensate for this pecuniary difference so that U.S. cotton is price competitive with cotton grown in Brazil, India, China, or anywhere else.

That makes sense, a priori, but again, what does the data say?

Well, to find out I went back and correlated the ICE Dollar Index with the ICE Cotton Contract using weekly data from 16 February 2007 – 22 August 2012. Due to some indexing issues, I correlated their respective percent changes. There were 288 observations.

If our logic is correct, the data should confirm our prediction that: Overall, the higher the value of the dollar, the lower the value of cotton. And it does.

I found that the two variables have a correlation coefficient of: -.429, denoting a moderately negative relationship.

In relation to the coefficient of determination, it can be said that: “18.4 percent of the variation in the price of cotton can be explained by the change in the value of the dollar.”

Maybe most important however, is our final coefficient. Our rough back of the envelope model has a coefficient of -3.27.

This can be interpreted as: “On average, a 1 percent increase in the value of the dollar results in approximately a 3.3 percent decrease in the price of cotton.”

With respect to other currencies, in the first half of 2012 the value of the dollar was actually up. In fact going back from March 2011 (when we were at $2 cotton) – August 2012 the value of the dollar was up nearly 8 percent.

If our simple model’s coefficient is assumed to be close to the actual coefficient, this means that approximately 26 cents worth of the fall in the price of cotton from $2, to where it sat on August 2012, can be accounted for simply in the dollar’s increase in value.

Now, however, the story has turned around. From January of this year through nearly the end of September the US dollar is essentially flat. What happened you ask? QE3 happened.

QE3 is the abbreviation for the Federal Reserve’s third round of “quantitative easing,” which is just massive purchasing of financial assets with newly created money. Read: Inflation. QE1 and QE2 were ineffective. So why not try it a third time?

So, what should cotton producers prefer? A lower valued dollar and higher prices for their crop – with more expensive input costs (and goods and services) coming around the corner – or – a higher valued dollar and lower prices for their crop – with the prospect of cheaper input costs (and goods and services) nearby.

It is my sense, to the detriment of American consumers and savers everywhere, that the American cotton grower should prefer a lower value dollar. This is because, as we have seen, the lower the value of the dollar the higher the dollar price for cotton will be.

There is no doubt that with a lower value dollar, input prices and living costs will rise as well. However, this rise will most likely be tempered from the cotton producer’s perspective by the temporary (if only mildly temporary) stickiness of some consumer prices – a fact that is not an issue in commodity markets.

The takeaway?

Never forget that cotton is a global market. Never forget that you are to a large extent an international exporter – and foreign nationals are your customers! Most importantly, never forget that both monetary and fiscal policy decisions both at home and abroad matter.

Be smart. Know your costs. Be the lowest cost producer around – and when the price works for you – don’t be afraid to hedge or sell!

First published by Cotton Grower Magazine under the title: Cotton Prices and the Value of a Dollar.

Share this:

Share this: