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Keep the Boat Afloat

November 28, 2012


DanSiemersDan Siemers

Newton, Wisc.

Dairying with 2,700 cows, Siemers Holsteins has been operating at the same site for more than 120 years. 



**Extended comments highlighted in blue.

When I saw the title for this month’s discussion on risk management, my mind jumped to milk futures and feed prices. But the more I thought about it, there is more at risk than one year’s profit-and-loss statement.

Don’t get me wrong: profitability (and defending it) is a big deal. But there are many other things that we all do to keep the boat afloat:

1. Insurance—There are many types of insurance most of us need to mitigate risk. Crop insurance is almost a no-brainer in today’s world. We carry revenue-guaranteeing crop insurance, and it has really made a difference for us in bad years. Life insurance is vital for our team—to give us flexibility in case of an untimely death. Umbrella insurance, fire insurance, workman’s comp…you get the picture.

2. Business agreements—Heifer-raising contracts, land leases, buy-sell agreements, estate planning, credit terms—lots of things to think about both short- and long-term that can pose risk to our business.

3. Political risk—Here’s one we don’t always consider, but immigration policy, environmental regulations, access to capital, interest rates, trade policies, exchange rates, tax codes and the world economy affect us virtually every day. Who would have thought years ago that faraway places like Greece and China would mean so much here at home?

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