Completing the farm risk management picture
This is Tim Hammerich of the Ag Information Network with your Farm of the Future Report.
Farmers are generally growing millions of dollars of crops for very thin margins. This means risk management is of the utmost importance. Farmers Risk CEO Dakota Hoben says that when it comes to managing price risk, there are three basic components.
Hoben… “The core things that are really at a farmer’s disposal in order to manage their risk comes down to their crop insurance choices. It comes down to their cash sales strategy, meaning what are they gonna do with their physical bushels? And then ultimately a hedging strategy as far as can I utilize features and options in this equation as well to help me, you know, offer me some additional flexibility in how I manage my risk. But understanding all of those is kind of a lot. Again, you can click down another two clicks on each of those. But fundamentally, what we saw a lot of farmers doing, is farmers would sit down with their crop insurance agent and they would make just a crop insurance decision, or they’d call up their grain merchandiser and they’d make just a cash sale, physical bushel decision, right? And so many of these things depend on each other, right? In this kind of risk management picture. That we wanted to help farmers kind of have a fuller, better understanding of what that risk management picture looked like on their farms.”
Hoben and his team at Farmers Risk hope to integrate these components to inform more data driven decisions when it comes to farm marketing and risk management.