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Many of the biggest risks in agriculture are also the hardest to influence. Control the weather? Raise grain prices? Tweak exchange rates? Good luck with that.
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Even so, with the right advice and tools, other risks are well within the farmer’s power to deal with. The key is to recognize them.
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“For a grain farm, there are many risks that can be mitigated,” says Farm Management Consultant Art Lange in Sherwood Park, Alta. “For example, there’s a lot you can do about production risk and market risk through crop insurance and financial instruments.”
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What about other risks on the farm? Lange offers this exercise.
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First, list in detail every foreseeable risk that could hurt the farm, whether in production, people, finance or something else.
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Second, for each, indicate how damaging it would be if it did happen: low, medium or high.
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Third, for each, estimate how likely it is to occur: low, medium or high. Many risks will have some type of mitigation available. If there’s a low risk of something mildly damaging, that’s not your priority. If there’s a medium or high chance of something quite bad, start there.
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Finally, Lange advises, refresh this exercise at least annually. This should help you stick-handle around the many risks you’re in a position to influence.
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“If there’s anything we know about agriculture,” says Lange, “it’s that things can change quickly.”
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Looking for ideas your farm can use?
We’re here to help.
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*This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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