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Corn+Soybean Digest

How To Rule Risk

Would you invest $250 in tuition to gain a $32,000 improvement in gross farm income?

In 1996, Texas farmers and ranchers who graduated from the state's first Master Marketer class in Amarillo did just that. After the class, they bumped up their gross farm income 3-5%. Although favorable markets played a role, they credit most of the improvement to lessons they learned in the program.

Although 1999 and 2000 aren't 1996, marketing and risk management skills are even more important now. That's why Texas and Kansas are on the forefront of initiatives to educate farmers about becoming more savvy in marketing and risk management strategies.

"The handwriting was on the wall in the early '90s that subsidies would decline," explains Mark Waller, Texas A&M University extension ag economist. So from 1993 to '96 he helped develop the first-ever Master Marketer program. In the program, farmers pay $250 for 64 hours of training - four, two-day sessions held two weeks apart.

The program has two objectives.

* To give farmers more risk management skills.

* To encourage Master Marketer graduates to help form marketing clubs in their communities.

Clay Simons, extension assistant who works with the Kansas Risk Management Club program, says of all the risks associated with farming, marketing risk ranks No. 1. Other risks he sees include changing farm policies, hiring employees, renting land, storing grain, buying equipment and borrowing money. They're all part of the smorgasbord of risk management topics offered to club members as meeting themes.

"The club members often are younger and progressive - and they want to attend," says Simons. Simons reports that the Kansas program, in its second year, now has 28 clubs that have held more than 200 meetings. Membership ranges from 15 to 50 farmers and meetings typically last two hours. The first hour is a more formal sit-and-listen session; the second hour is devoted to idea exchange.

"Probably the most important lesson I've learned is that in risk management you're not the only one to face the problem," says club member Dallas Hiebert, Rozel, KS. After one of the seminars, for example, he and his family began laying the groundwork for estate planning.

Clubs tend to develop their own personalities. In fact, says Kansas State University ag economist Kevin Dhuyvetter, "The difference is not in the risk management club meetings themselves, but in the camaraderie that develops. The benefits of seeing and hearing what's going on in other counties, and in other parts of the same county, are intangible."

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