Choose Your Battles
9/9/2009
Farming has always been a gamble: “Plant…hope crop comes up…produce…sell for a profit,” commented one respondent to a survey of Top Producer readers last month. “But the input costs versus selling price, along with the tremendous cost of machinery, makes that gamble a much higher risk today. I don’t believe a farmer makes more net profit today, just handles more money. But it is a really great way to make a living.”
It’s not possible—or even desirable—to control every business risk you face. However, you should make informed and logical choices about which you accept, which you manage and which you sell to an insurer. As the graph below shows, in our survey, 77% of readers reduce price risk through forward pricing or using futures or options. More than half seek to reduce input price risk the same way. See “Risk Audit,” page 22, for a list of risk categories and how one grower deals with them.
