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FARM & RANCH: Risk a Constant in Growers’ Lives

One of the things that has puzzled me over more than three decades of writing about agriculture is that in farming and ranching — an industry in which operators eagerly embrace new technologies — so many producers are reluctant to flirt with new business tools.

Many farmers and ranchers are about as eager to get into risk management as young people are to date someone with bad breath or severe body odor.

Risk is a constant and as farming and ranching have become more complex, so have the risks. No one can make risk go away, but it can be managed. And that’s an important key to survival in these difficult economic times.

A couple of years ago Farm Futures magazine surveyed farmers’ attitudes about risk management. At that time only about 5 percent of the magazine’s readers were using tools available to them to manage risk.

The U.S. Department of Agriculture Risk Management Agency lists four reasons why farmers and ranchers are reluctant to manage their risks.

Right there on top is resistance to change. Farmers and ranchers are, by nature, a conservative lot. Change is uncomfortable. Interestingly, these cautious folks sometimes champ at the bit as new technologies come over the horizon, eager to try out new equipment, chemicals or production practices.

But changing the way they make business decisions is, perhaps, more fundamental and represents a greater perception of risk. I suspect many are fatalistic, believing that they are at the mercy of the whims of market gods. Maybe I should wander across campus to the psychology department and bounce that idea off of some of my friends there.

Number two is the feeling that risk management involves too many decisions and not enough time to study them. If farmers understand anything about risk management, they know that even good tools poorly applied can put them on the road to ruin.

The number three reason is an abiding distrust of the futures industry. Farmers have been slow to snuggle up to crop insurance, even though it’s been around for a long time now.

Ironically, in the past the federal farm programs have buffered the harsh realities of economic risk in grain production, thus reducing the perceived need for risk management. That was the fourth reason listed by RMA.

Many types of production, including tree fruit, never have had government price supports and have had to cope with risk on their own. Today, apple growers are between a rock and a hard place, especially those still growing red delicious, which account for about half of the state’s production.

So far this crop year’s average price per 42-pound carton of red delicious is running about 22 percent lower than the 1999-2000 price and — at $9.40 — nearly 28 percent below $13 per carton estimated cost of production.

Recently, RMA launched a Pacific Northwest Orchard Families Project to help orchardists learn risk management skills that could be very important survival tools. RMA is teaming with WSU Cooperative Extension, USDA Farm Services Agency professionals and Wenatchee Valley College to conduct a series of workshops for orchardists.

Each workshop will cover two full-day sessions, on two Saturdays so each adult decision maker in the family can participate.

The first workshop will be held in Yakima, 8:30 a.m. – 4 p.m., Jan. 20 and 27. The second will be in Okanogan, Feb. 10 and 17. The final workshop will be held in Chelan, Feb. 24 and March 10. Additional workshops will be held in Oregon and Idaho late next fall.

The workshop will integrate information on financial, orchard, and market analysis and management, family strengthening, personal health, marketing, managing production risks, goal setting and coping with change.

Participants will be able to develop a family business and finance plan.

Each workshop will cost $10 per person, including two lunches. To register, send a $10 check, payable to WSU Cooperative Extension, to PO Box 550, Waterville, WA 98858.

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