Farmers and ranchers are no strangers to risk. You may not be able to get rid of risk altogether, but you can minimize it. Here's how.
We take risks everyday — some intentionally, some not. In agriculture, many of the risks taken are not by choice but are a part of the job. The types of risks in agriculture come from a variety of areas that affect business — production, pricing, finances, politics and personal life events. The best way to manage these risks in farming is by understanding how they occur and creating agricultural risk management strategies to minimize the risks being taken.
1. Production and Price
Production and price risks can be unintentionally taken by diseases affecting livestock, weather-related damage to your farming operation, technology errors and other circumstances.
Risk Management Plan. Create a farm risk management plan filled with seasonal reminders to review your farm and ranch insurance policies, look at diversifying your operation and reevaluate the technology you use to take inventory of what’s working and consider potential changes to alter what’s not.
Financial risks taken in the agricultural industry can include taking out loans you may struggle to pay back or not having a full understanding of how much your operation is worth and what financial assistance you may need.
Risk Management Plan. For farmers, risk management should include meeting with a financial advisor to help you make the right choices about funding the next year of your ag business.
Government decisions are a frequent source of risk and uncertainty in agriculture, both directly and indirectly. This is done by adding or removing regulations, or by adjusting the government aid that is provided to farmers and ranchers.
Risk Management Plan. Keeping an eye on the news and being aware of current legal discussions and decisions is the best way to be prepared for any new or changing policies that may pose a risk or asset to your operation. Learn about the public policy issues the Utah Farm Bureau is working on, or visit with your local County Farm Bureau or State Farm Bureau leaders to learn more.
4. Personal Life Events
Personal events you may encounter in life may have an impact on your business. This can range from an unexpected death, a divorce or an injury on the job.
Risk Management Plan. Creating a risk management plan also includes the people involved in the operation — this can be done by reviewing your insurance coverage for your staff and having any legal agreements updated when needed.
Risks can never be removed, but they can be minimized. Find out how you can protect yourself and your operation by meeting with a Farm Bureau agent today.