Agriculture is one of the oldest human practices in history and risk management, by comparison, is a relatively new tool developed for companies. But agricultural risk management is a very important tool for farmers.
Agricultural risk management makes great sense. After all, farming is incredibly risky. It always has been. And even with all the technological help farmers have, they are still left to the mercy of unforeseen droughts, floods, tornadoes, freezes, hail, blights, insects, and fires as well as changes in regulations, customer desires, and globalization.
In the recent past farming has seen chaotic times. Unpredictable prices combined with swings in product demands have impacted the financial side of farming. Climate change, natural disasters, war, strife, and disease have impacted the production side.
So now agricultural risk management has become an essential method for farmers to proactively mitigate risks and reduce liability. Beside the farmer, governing agencies must also consider agricultural risk management. And the risk management plans developed by both the farmer and government agencies must align with each other to ensure successful mitigation.
Governmental agencies should provide a complete plan that assesses all risks in order to properly help farmers, including catastrophic risks, subsidized insurance, proper start-up training and empowerment. These agencies should focus on extreme large scale risks while the farmer can focus on normal day-to-day operational risks.
The results of an effective and diverse risk management program will stabilize and even strengthen the farm and uphold and improve the farmer’s standard of living.
The overall goals of the combined efforts of farmers, government agencies, and agricultural risk managers should be sustainable food production, flexible agricultural practices that will increase production, practices that sustain ecosystems, increase in the ability to adapt to climate change and natural disasters, and a continued improvement to the quality of the land.