This unit applies to the ability to determine cost of production, assess risk, analyse trends and evaluate forecasts, and monitor and assess price movements.

ELEMENT

PERFORMANCE CRITERIA

1. Conduct market research

1.1. Estimates of supply and demand are collated and evaluated.

1.2. Past trends are analysed and possible future scenarios assessed.

1.3. Own products are related to market indicators.

2. Determine price required

2.1. Cost of production is calculated and break-even price is determined.

2.2. Margins for profit and risk are determined.

2.3. Forward price objectives are set to meet cost of production plus profit required.

2.4. Personal attitude to risk is evaluated.

3. Develop sales plan

3.1. Cash markets are evaluated and projected price trends assessed.

3.2. Forward contract information is obtained and assessed.

3.3. Futures prices are obtained and assessed.

3.4. Options are evaluated against price objectives and the assessment of price movement risk.

3.5. Taxation and cash flow implications are assessed.

3.6. Appropriate mix of sale options is developed in a trading strategy.

3.7. Contingency plans are developed to address possible shifts in price trend.

4. Implement trading strategy

4.1. Appropriate expertise is sought as required.

4.2. Market information is monitored and trading strategy adjusted according to contingency plans.

Required skills

determine cost of production

assess risk

analyse trends and evaluate forecasts

monitor and assess price movements

use literacy skills to fulfil job roles as required by the organisation. The level of skill may range from reading and understanding documentation to completion of written reports

use oral communication skills/language competence to fulfil the job role as specified by the organisation including questioning, active listening, asking for clarification, negotiating solutions and responding to a range of views

use numeracy skills to estimate, calculate and record complex workplace measures

use interpersonal skills to work with others and relate to people from a range of cultural, social and religious backgrounds and with a range of physical and mental abilities.

Required knowledge

supply, demand and price relationships

price trends and sources of market information/forecasts

cost of production

risk assessment and attitudes to risk

selling options for the relevant commodity

operation of futures markets, forward selling arrangements, put options

foreign exchange rates

contract law

cash flow and taxation planning

contingency planning.

The evidence guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package.

Overview of assessment

Critical aspects for assessment and evidence required to demonstrate competency in this unit

The evidence required to demonstrate competency in this unit must be relevant to workplace operations and satisfy holistically all of the requirements of the performance criteria and required skills and knowledge and include achievement of the following:

determine cost of production

assess risk to financial returns through market or currency movements

analyse trends and evaluate forecasts

monitor and assess price movements

implement a trading strategy for price risk management.

Context of and specific resources for assessment

Competency requires the application of work practices under work conditions. Selection and use of resources for some worksites may differ due to the regional or enterprise circumstances.

The range statement relates to the unit of competency as a whole.

Cash markets may relate to:

markets that do not involve any hedging or forward selling.

Unit sector

Agribusiness

This unit contains employability skills.