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Corn+Soybean Digest

Risk Management – How Do You Rate?


When my grandfather began farming in the early 1920s in the fertile soil of southern Nebraska, he probably never imagined a time when tractors would steer themselves, planting would be guided by GPS or the smartphone could access weather forecasts and markets at the touch of a button.  

Yes, farms are larger, inputs are higher, markets are extremely volatile and there’s more at stake. But technology is making life on the farm a whole lot easier, especially when it comes to risk management.

“It’s not just about cows and plows anymore. We’re managing a major business here,” I’d tell my grandfather when I was fresh out of college.

Farming is a passion, but it’s your livelihood. Managing risk – and doing it well – is critical if you want to stay profitable today and pass on your legacy tomorrow. Technology is your new friend.

Risk management means different things to different people. “The key is to find the correct balance of risk compared to earnings potential,” says Ryan Kirchhoff, vice president of FCSA, Kearney, NE. “At Farm Credit Services of America, we work with customers to determine the amount of risk they’re comfortable with and the amount of risk the operation can sustain.”  

And from Steve Knuth at AgWest Commodities of Holdrege, NE, “Due to extreme volatility in a global economy, producers not only have to manage market and weather risks, but input costs and basis decisions, too.”

Crop insurance is also a vital component of risk management when it comes to protecting the American farmers’ revenue stream, says Kevin Johnson with Farmers Mutual Hail Insurance Company of Des Moines, IA.

Who’s right? They all are. A comprehensive risk-management plan should include all of the above and then some. But there’s a lot of information to manage.

The key to effective risk management is getting organized, developing a thorough plan and updating it regularly with current information so you can be as prepared as possible for the unknowns. Managing what you know can help you manage through the unexpected.   

You can accomplish these tasks with a yellow notepad and calculator, but too often farmers toil over the numbers only to toss that notepad in a heap of papers in the corner of their office. 

Don’t let the process overwhelm you. If you take the approach that, “I’m going to start today with the basics, and develop a simple breakeven analysis and track my cash positions,” you’ll be off to a great start. Then, consider leaving the notepad in the pile.

Today, with Web-based technology, you can create a living, breathing risk-management plan that’s updated daily with current market values and can be modified on the go from your computer or smartphone.

Like auto-steer and GPS, Web-basedrisk-management technology is the next evolution in keeping your farm profitable – and the gray hair at bay. Farming is hard enough as it is; just ask my grandfather. Don’t make it more difficult by leaving your profit to chance when new tools can help you manage with confidence.  



Corn & Soybean Digestwelcomes Profits columnist Pat Kroese, vice president of marketing for GrainBridge, an agricultural software company in Waterloo, NE. The firm specializes in risk management. You can contact him at 800-515-5657 or check out the Web at 

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