Crop Insurance Today May 2013 - (Page 27)

CropInsuranceTODAY When It Comes in So Many Forms? How Do Farmers Manage Risk By Dave Ray, North Bridge Communications It’s often said that farming is a risky business, and farmers would likely argue that this is a gross understatement. While the risks caused by Mother Nature make the most news, there are many other risks involved that farmers must prepare to manage. In 2011, farmers saw a string of major natural disasters, including early freezes, record floods, droughts, wildfires and hurricanes. Then, 2012 dealt farmers the worst drought in decades, with a majority of the continental U.S. experiencing some level of drought during most of the growing season. And the drought continues in 2013, with more than 60 percent of the continental United States remaining in some degree of drought. The economic nature of farming, which consists of many people producing one common product with limited buyers, is itself susceptible to risk, since individual producers have very little, if any, influence over the prices they receive for their final products or what they pay for their production inputs. When you add this inability to influence a price to the volatility of the world market—where the price of a commodity changes by the minute—it’s easy to understand why farmers are always thinking of ways to manage their risk. There are also the financial constraints of farming, which is very capital intensive. These constraints are so great that it’s becoming increasingly difficult for younger farmers to enter the business without an endowment of working capital from a financial backer, usually a bank. Thankfully, there are a number of tools available, and widely used, to manage the economic, structural and environmental risks of farming and ranching. While crop insurance is the most ubiquitous risk management tool used by farmers—86 percent of total planted acres in 2012 CROPINSURANCE TODAY ® 27

Table of Contents for the Digital Edition of Crop Insurance Today May 2013

President's Message
2012 Year in Review
2013 Annual Convention Great Success!
Max Erickson Awarded Outstanding Service Award
Larry Heitman Pesented Leadership Award
Leadership of NCIS Regional/State Crop Insurance Committees
How Do Farmers Manage Risk When It Comes in So Many Forms?
Step 9-Monitoring and Controlling the Farm Business Q: How do I monitor progress over time?
Three Industry Stalwarts Presented Lifetime Achievement Awards
Cover Crops
Crop Insurance Plan Comparison
NCIS Retirements

Crop Insurance Today May 2013