Helping Farmers Manage Risk

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.

Danny Flynn, crop insurance specialist for TMA, discusses

risk management strategies for 2014 with Dennis Friesen.

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.”

Ag Organizations Partner to Save Lives

Over the past 50 years, more than 900 cases of grain engulfment have been reported in the U.S. with a fatality rate of 62 percent. In 2010, at least 26 U.S. workers were killed in grain engulfments - the highest number on record.  The most tragic of all: grain engulfments are highly preventable.

Nationwide Agribusiness Insurance company is partnering with Farm Safety for Just Kids, Iowa FFA Foundation and others to increase awareness of the dangers of flowing grain and bring visibility to safety procedures that can save lives through an annual Grain Bin Safety Week beginning February 23.

Timed to bring safety awareness to the dangers of grain bins prior to planting season in much of the country, the week-long event will highlight a different component each of the seven days including grain management, bin hazard identification, bin and equipment design, bin entry, working safely in a bin, extraction/rescue and confined spaces beyond the bin.

Highlights of the week include:

• #AgChat on Twitter 7 - 9 p.m. CT, Tuesday February 25. (Be sure to include the hashtag #GBSW14 in your tweets.)
• On Wednesday, February 26, Nationwide Agribusiness will host a free, live webinar on grain safety that is open to everyone. Farmers and commercial grain handlers will gain valuable insight into the risks and hazards of grain bins, safe-work procedures, OSHA standards and more. Reserve your spot now at http://nwagcompanyevents.fugent.com/home/events.asp.
• Win safety equipment and training for your local fire department. The contest runs from January 1 to April 30. nationwide Agribusiness and NECAS have partnered to provide grain entrapment rescue training and a bin rescue tube (valued at $2,600) to one nominated fire department or emergency rescue squad. Official rules are available at GrainBinSafetyWeek.com.

MKC Employees to Participate in National Wear Red Day

By Kerry Watson, Director of Communications

MKC employees will be adding a little color to their uniform on Friday as they

join others across the nation and wear red to help bring more awareness to heart disease. National Wear Red Day, held the first Friday of February each year, helps bring awareness to heart disease and its impact not only on women, but men as well.

Relevance - Standing the Test of Time

By Dave Christiansen, President and CEO

Regardless of what cooperative I happened to be serving at the time, it’s certainly been interesting over the years to pause and reflect on the relevance we possessed and to whom. The first time I recall listening to a discussion about relevance was in the mid-'70s when the co-op I was working for achieved record sales. That certainly seemed a big deal at the time and I recall our vendors treated us as such. As an employee group we took a lot of pride in what our relevance meant we could deliver to our customers. At the time, little did we know the bar to be considered relevant in the agricultural industry was beginning a very rapid ascent.

Team Marketing Wins Awards for Excellence

Congratulations to our partners at Team Marketing Alliance (TMA) of Moundridge. TMA was honored for dedication to excellence in customer service at the recent Seventh Annual Diversified Crop Insurance Services Spring Training event.

TMA partners with Diversified Crop Insurance Services to provide risk management tools and opportunities for farmers and farm owners. During this meeting, DCIS recognizes those who have provided outstanding leadership and administration of the Federal Crop Insurance program by presenting awards for excellence.

Team Marketing Alliance and DCIS have worked diligently to ensure that farmers are provided with the most up-to-date information to make the most informed decisions for their operations.

During the three-day conference, attendees networked with other crop insurance professionals from across the nation. They also participated in additional training that will enable them to even better assist their customers.

TMA's Crop Insurance Specialists earning recognition include David Yenni, Lindsey Wilson, Mardee Hollenbeck, Nick Levine, Steve Hughbanks and Danny Flynn. 

Team Marketing Alliance, located in Moundridge, is an independent agency for Diversified Crop Insurance Services. The agency phone number is (620) 345-3560.

Delivering a Helping Hand

By Nichole Gouldie, Communications Specialist

July through August is a busy time for Kansas farmers. Throw in record-setting rainfall, and the pressure is multiplied many times over for producers, meaning busy times for their cooperative. MKC saw this pressure this past summer but was relieved to know some friends up north were there to deliver a helping hand.

 

"This year was a very unusual year for our trade territory due to all the rain we had in late July and early August," said Erik Lange, Director of Southern Operations for MKC. "Generally by mid-August we are beginning to get busy with pre-plant wheat fertilizer applications but due to very wet soil considerations we were unable to start in a timely fashion. By the end of the second week of August, Steve Peterson and I had begun to talk about alternative methods to get our customers taken care of. It came to mind we should call South Dakota Wheat Growers and see if they had people or assets available to help us get caught up."

 

According to Lange, this relationship started with a phone call with Phil Gilbert, SDWG regional manager. Over time, Gilbert and Lange have built a relationship, continuing to find ways to help the other organization when they can.

 

"It isn’t easy to move rigs, but people and tender trucks move quickly," Lange said. "We looked at our situation and realized if we could just tender our existing equipment better we could cover more acres."

 

According to Lange, MKC consciously understaffs tender drivers because it is a seasonal task and normally elevator employees can be relied on to fill in. This year fall harvest started and the elevator employees were engaged in servicing grain customers at the same time fertilizer needed to be applied. "SDWG’s assistance worked out great as they were in their very slow time of the year and had drivers and extra tender trucks underutilized," he said. "Overall, SDWG sent 11 different drivers and four tender trucks to Kansas."

 

Prior to the SDWG team traveling to Kansas, six dry tender trucks, three dry rigs and nine employees of MKC traveled to South Dakota in May 2011. Over this three-week period, the MKC crew helped SDWG meet their customer’s fertilizer application and delivery needs in a year that the weather provided unusual challenges.

 

SDWG began as a state wheat pool in 1923 and has grown into one of the most successful cooperatives in the United States. They are an agronomy cooperative in the heart of the James River Valley of South and North Dakota. Owned by the customers it serves, SDWG exists to provide value for customer owners from Interstate 90 to Interstate 94 and the Missouri River to Interstate 29.

Schmidt Retires After 38 Years in Industry

After 38 years of service to the cooperative industry, John Schmidt officially retired on December 19.

"I have enjoyed working for and with our customers," Schmidt said. "They have brightened my day many times."

Schmidt said the bucket list after retirement is pretty long and includes traveling, catching up on projects that have been put off for a long time and doing some volunteer work in a couple of areas.

"It has been a pleasure to work with all the employees of MKC," Schmidt said. "I will be in the area for the foreseeable future, so I am sure I will be able to visit with some of you occasionally."

MKC wishes John well as he enjoys retirement. We hope he'll stop in and say "hi" from time to time!