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The Financial Risk Challenges in Agriculture

The Financial Risk Challenges in Agriculture. Doug Jose Director North Central Risk Management Education Center National Farm Financial Management Training Workshop Omaha, Nebraska June 2, 2009.

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The Financial Risk Challenges in Agriculture

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  1. The Financial Risk Challenges in Agriculture Doug Jose Director North Central Risk Management Education Center National Farm Financial Management Training Workshop Omaha, Nebraska June 2, 2009

  2. “The entrepreneur always searches for the change, responds to it, and exploits it as an opportunity.” - Peter Drucker

  3. Strategic planning is a plan to overcome risk. (the word “strategy” is derived from “leader of an army”.)

  4. Drucker defined strategic planning as: • The continuous process of making present entrepreneurial or risk-taking decisions with the greatest knowledge of their futurity. • Organizing the efforts to carry out those decisions. • Measuring the results through systematic feedback.

  5. Strategic Planning is not: • A box of tricks or bundle of techniques • Forecasting • Future decisions-it is the futurity of present decisions • An attempt to eliminate risk

  6. Risk Exposures Input/output prices Market power of suppliers and buyers Domestic economy Global economy Income stability Managers have risk exposures and opportunities

  7. Risk Exposures Consumer fads Management stability Information integrity Contracting arrangements Relationships Policies Managers have risk exposures and opportunities

  8. Risk Exposures Input/output prices Market power of suppliers and buyers Domestic economy Global economy Income stability Opportunities Productivity Managers have risk exposures and opportunities

  9. What opportunities do managers have? • Productivity Improvement Value per Input Value per Output Output per Input x = Source: J. Henderson, Presentation to National Risk Management Conference, March 2009.

  10. Risk Exposures Input/output prices Market power of suppliers and buyers Domestic economy Global economy Income stability Opportunities Productivity Strategic planning Wealth management Global trade Mission and goals Managers have risk exposures and opportunities

  11. Risk Exposures Consumer fads Management stability Information integrity Contracting arrangements Relationships Policies Opportunities Consumer trends Transition planning Information technology Alliances Relationship building Policies Managers have risk exposures and opportunities

  12. Farm Business Model Relationships Missions and Goals Strategic Planning Business Growth Risks Opportunities

  13. Model may be wrong… But it provides: • Plan of action • Tool to monitor achievement • Structure to adjust plan

  14. Workshop Outcomes • Increase your ability to help farm families identify their opportunities • Follow-up as a trainer and organizer

  15. Workshop Focus: Look for Opportunities Opportunities in: • Economic environment • Farm business records • Farm and family relationships • Farm and family goals • Outside resources • Financial • Linkages • Emotional • Social • Alternatives • Production plans • Outputs produced • Business structures • Asset management

  16. You will be able to help farm families: • Assess their situation • Identify their opportunities • Match their opportunities with their risks • Create more productive relationships • Develop management feedback mechanisms 6. Analyze their alternatives

  17. Post Workshop Outcomes You will organize and conduct: • Training of extension staff in your states. • State wide educational programs for farm families.

  18. Your Responsibilities • Initial Action Plan • Conference call on July 17 • Submit written plan to your • RME Center • State Extension Ag Program Leader

  19. Back Page Doug Jose North Central Risk Management Education Center hjose1@unl.edu

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