Farm Risk Management Framework

This is Tim Hammerich of the Ag Information Network with your Farm of the Future Report.

Determining a risk management strategy can sometimes feel like throwing darts in the dark, especially in volatile agricultural markets. Most farmers, however, can use these four steps developed by the team at Agricultural Economic Insights.

Widmar... "The first one's brainstorming. So spend some time actually thinking about all the bad things that could possibly happen. But then prioritize and rank the three. And this can be really, really hard. So step two is prioritize and rank. You're going to find some similarities between these things that you've listed. You're going to find things that might be important, but low probability. You might find things that are really important to the Farm economy broadly, but you have something that's really more specific to your operation like a transition that's coming up or an HR issue that needs to be addressed. And then the third step is to summarize it. Challenge yourself to spend 15-20 minutes writing a summary for each of those. And then the fourth step is to share it. Share it internally with your teammates, share with your trusted advisors. If you're able to have Three risks that you're willing to talk about or to share, you're going to be able to have really great conversations with those around you. It's not just rambling about what ifs and never ending list of possible ways that your business could face difficulties in the upcoming year. But if you narrow that down to three and you've summarized what it means to your operation, it opens up a whole lot of opportunities."

That’s the managing partner of Agricultural Economic Insights, David Widmar.