BEGINNING FARMERS PROGRAMAUGUST 10 , 2013

Risk Management Planning

Risk

Risk is the potential of loss resulting from a given action, activity and/or inaction. -- Wikipedia

You can make the best decision and have a bad result.

Types of Risk

Production RiskMarketing RiskFinancial RiskHuman RiskLegal Risk

Production Risk

DiversificationAlternative, and Sustainable Agriculture

http://www.ctahr.hawaii.edu/sustainag/links/New Technologies and Inputs

Energy, nursery, organics, equipmentCrop Production

Weather, pests, equipment breakdowns, othersInsurance

Crop and Livestock Insurance Property and liability insurance Health and disability insurance

Basic crop insurance

At a minimum, growers should purchase “Catastrophic Coverage” (CAT) for eligible crops, and “Non-Insured Crop Disaster Assistance” (NAP) for crops that cannot be insured under CAT. Although these programs don’t offer a high degree of protection, they do help in case of serious crop failures, they are very affordable, and they make you eligible for assistance in the event of disasters like widespread drought or flood. Additional crop insurance beyond CAT or NAP may be worth the additional cost to you, but it takes time to figure out these costs and benefits. If you don’t have that time, at least get CAT or NAP coverage.

http://www.rma.usda.gov/policies/

Good Agricultural Practices

http://www.youtube.com/watch?v=jP4WUepapCs

Marketing Plan

Financial Condition and Goals:Price Goals (Break-even / Family Living / Profit

and Growth Needs)Market Outlook/Expectations (fundamental,

technical, seasonal)Production Risk ToolsPrice Risk Tools/Alternatives Price and Date ObjectivesStrategieshttp://www.agrisk.umn.edu/cache/ARL00137.pdf

Financing Risk

Good referencehttp://pubs.cas.psu.edu/freepubs/pdfs/ua409.pdfFinancing Small-scale and Part-time Farms Using other peoples’ money Leases Loans

Human Risk

Personal/FamilyEmployeesPesticides

Legal Risk

Business OrganizationRenting and LeasingContractingEnvironmentalTaxesBankruptcy Succession Planning