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The trigger for an AgriStability payment could be closer than you think.
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Many farmers use AgriStability to manage risk and pay the bills after a down year. Others wouldn't touch the program with a 50-ft. auger.
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Steve Funk wonders if the second group has given AgriStability a fair shake, but he understands their perspective.
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"It can be difficult to understand how these programs work," says Funk, Director of Agriculture Risk Management Resources with MNP.
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The trigger point to receive an AgriStability payment is a 30% drop in margin. To Funk, that's an issue right there.
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"People have a hard time relating to margin drop," he says. "Margin is revenue minus direct costs. Revenue is production times price. The question is, what kind of loss of price, production or both is needed to trigger AgriStability benefits for your farm?"
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It could be less than you think. In a high-cost business like a feedlot, a 3% loss of revenue could create a 30% margin drop. On a grain farm, a 12% to 18% revenue decline could mean a 30% margin drop.
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Funk invites farmers to crunch the numbers on AgriStability, crop insurance and private insurance where available. Your accountant or consultant can help.
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"People need to learn how these programs work," says Funk, "and in particular how they can work together. We find that a combination is usually required to properly protect the farm.
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Looking for ideas your farm can use? We're here to help.
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