By Nichole Gouldie, Communications Specialist
Risk is an
unavoidable element in the business of agriculture. Production can vary widely
year to year due to unforeseen weather and market conditions, causing wide
swings in commodity prices. But risk, while inevitable, is often manageable.
Following a
storm this past June, McPherson area farmer Dennis Friesen saw green snap
damage like he had never seen before. After the area received 80-90 mph winds,
he soon discovered the risk management decisions he had made with TMA and MKC
were bound to improve his return on his investment.
After looking
over his fields following the storm, Friesen immediately called his TMA Crop
Insurance Specialist, Danny Flynn. Within three days, the totaled corn field
was chopped and a short-season corn was planted. “Very quickly Dennis was able
to collect insurance, protect his revenue and pursue another crop,” Flynn said.
Once he
received word the corn crop was 70 to 80 percent damaged, Friesen worked with
Dusty Campbell, TMA grain marketing specialist, to make sure he would be okay
on his marketing strategy.
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Danny Flynn, crop insurance specialist for TMA, discusses
risk management strategies for 2014 with Dennis Friesen.
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TMA provides
producers with a multitude of risk management offerings that can be customized
to fit their operations. The array of risk management strategies available to
producers allows the opportunity to place their attention on making buying and
selling decisions based off timing and profitability instead of price.
“There are a
number of tools available and widely used to manage the economic, structural
and environmental risks of farming,” said Devin Schierling, TMA grain marketing
manager.
Schierling
says
the local
cooperative plays an integral role in assisting customers manage their crop
input risk, just as the TMA specialist focuses on maximizing revenue through
grain marketing and crop insurance decisions. “This approach allows our
producers to focus on the timing of their marketing decisions,” he said.
“Depending
upon their needs, producers will have the ability to manage their farm’s risk
in multiple crop years by using traditional forward cash contracts, option
based contracts, and over-the-counter contracts,” Schierling said. “TMA
provides producers with a multitude of risk management offerings that can be
customized to fit their operations and grain contracts as the vehicle to help them
maximize their revenue potential.”
Although farms
vary widely with respect to crop mix, financial situation and other business,
timing and looking at trends is the most important part of creating a successful
risk management plan. Schierling encourages producers to focus on their farm as
an enterprise to allow them to make decisions based off revenue and not from an
individual price perspective.
While
producers often take the steps necessary to manage their risk, there are times
when it certainly pays off and the producer learns first-hand just how
important managing risk is to their operation.
Friesen stated
it was reassuring to have the specialists there to help make sure he was taking
the appropriate steps to make the insurance claim correctly.
“Dusty and
Danny worked together, and we worked with Jared Jones right away to check
availability of seed,” Friesen said. “I won’t find this type of customer
service with other companies.”
While crop
insurance is the most ubiquitous risk management tool used by farmers - 86
percent of total planted acres in 2012 were insured – there are other tools
many farmers use as well.
“Agricultural
practices, marketing and financial strategies are all critical in helping producers
manage their risk,” said Jared Jones, MKC field marketer. “The TMA and MKC
relationship provides numerous avenues for producers to manage their risk.”
The risk
management services at MKC include programs such as MKC’s risk 12-month forward
contracting on fuel, crop protection and nutrient products, and the double-crop
soybean revenue program.
Friesen says
he regularly works with TMA and MKC specialists to manage risk.
According to
Jones, the moment a producer decides to plant, the risk management cycle
begins. TMA and MKC work together to determine inputs, crop insurance and the
ability to market grain.
Friesen stated
risk management is a continuous cycle working with his insurance specialist,
grain marketing specialist and field marketer. “It all works really well
together,” he stated.
“Every one of our producer’s definition of a
successful risk management plan is different,” Flynn said. “Plans will
change depending upon the customer’s operation but the focus is always on
maximizing our producer’s revenue potential.”
