The University of Arkansas Cooperative Extension Service has developed a series of risk management resources to help growers manage their farming decisions in a time of increased uncertainty for agriculture.
“Another year of low crop prices is projected to have 2016 revenue less than sufficient to cover production costs,” says Archie Flanders, Arkansas Extension economist. “The current financial situation calls for producers to consider all aspects of risk management as profit margins are decreased from normal levels.
Flanders notes that Input costs for fertilizer and fuel have declined slightly from 2015 levels, while Prices for seeds and chemicals will likely face pressure for downward flexibility as low crop prices impact all sectors of the agricultural economy. Seed, fertilizer, chemical, and other decisions for the farm could be thoroughly analyzed with crop enterprise budgets.
“Planning should evaluate alternative production practices and consider that some inputs having uncertain potential for yield improvement may not be justified with current crop prices,” points out Flanders. “Crop insurance with provisions for prevented planting and replanting represent additional expense, but low crop prices have increased the vulnerability of farms to the financial effects of adverse weather.”
The risk management resources – available online – includes information about crop insurance and other available risk management programs, as well as interactive decision aids to help growers explore budgeting, insurance and program options.
Source – University of Arkansas