Risk Management Lessons Taught by Drought

By Heather Koehler, October 11, 2012

Reflect and Move Forward

The 2012 drought across most of the United States’ major agricultural regions has taught farmers a lot about their businesses. The agriculture industry knows that it has changed a lot since the last major drought in 1988. The effects of this drought on farmers and the industry will be different, so the lessons that farmers can take away from the 2012 season will be unique, too.

I attended a recent round-table event in Lincoln, Neb., featuring ag risk, finance and market advisors from Water Street Solutions and Kent Thompson with Kruger Seeds. The panel members provided insight into the effects of the drought from a business perspective. Here are what I considered to be the top 3 lessons that farmers should take with them into 2013:

Tim Yohnka, a farmer in northeastern Illinois, gives perspective on the size of a crack in his family's cornfield. This region of Illinois was lucky enough to get early summer rains but still suffered yield loss.

Tim Yohnka, a farmer in northeastern Illinois, gives perspective on the size of a crack in his family's cornfield. This region of Illinois was lucky enough to get early summer rains but still suffered yield loss.

Lesson 1: Find the holes in your risk management plan. What parts of the operation are left out, what marketing decisions are exposed and where are the gaps in insurance coverage? While this year was an anomaly, farmers should work to fill in those holes because they never know when another anomaly will occur.

Within lesson one, the specialists with Water Street Solutions strongly recommended to only forward sell up to the amount of grain that is covered by the farm’s crop insurance policies. Forward-contracting grain can be a good marketing practice, but when farmers sell more bushels than what their crop insurance policy will cover, they expose themselves to the possibility of having to buy back with their own money the contracts that cannot be fulfilled. Some farmers who put themselves in that position this year may be draining their working capital or selling land to stay in business.

Lesson 2: Make input decisions based on multiple-year trends. Don’t drastically change how you match the best seed for your farms based on this past year.

Lesson 3: If you have a field with higher risk, consider additional insurance coverage. Total weather insurance is a supplemental policy on top of federal crop insurance. The additional insurance pays policyholders based on specific weather events, such as a single day’s daytime heat stress, nighttime heat stress and moisture level for the covered field’s exact location. The policies can be expensive, but they can mean a lot of value to farmers in years like 2012.

Kent Thompson believes that seed companies will have enough seed supply. The bigger challenge will be their management of inventory and getting the right hybrid in the right spot. Farmers may want to consider additional insurance policies like total weather on fields that aren’t seeded with the best hybrid for that particular location due to inventory issues.

What other business lessons can farmers impart from the 2012 season?

Heather Koehler works on the AdFarm public relations team. The only thing separating her from corn fields and cattle (for at least part of the day) is her office window.

Taking AdFarm Values to South America

By Art Froehlich, August 30, 2012

I have always believed in AdFarm’s vision of being a connector and catalyst for the advancement of agriculture. And, I’ve always believed this is a vision that extends beyond the boundaries of the traditional Canadian and U.S. markets we serve. Most of my career has been spent in the international agriculture & food industries and contrary to what most would think here in North America there are so many similarities and so much we can learn.

Four years ago I started learning more about Peru from an acquaintance who was interested in developing better construction and housing in this developing South American nation. I began to develop a keen interest in helping improve agriculture and nutrition as part of the overall development project.

A Peruvian farmer doing work in his pepper field.

A Peruvian farmer doing work in his pepper field.

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Who makes the call on animal welfare?

By Tyler Kelley, June 28, 2012

Consequences abound in coming changes to animal housing regulations.

Once upon a time producers, veterinarians and other experts shaped production practices for animal agriculture. Today, sadly, activist groups like the Humane Society of the United States (HSUS) force their way into executive board rooms of food companies, the halls of Congress and offices of state capitols to drive agendas that have consequences far beyond the farm.

For proof we need look no further than Cracker Barrel Old Country Store, the latest chain to require their pork supplies to come from farmers who don’t use gestation stalls to house pregnant sows. It is worthwhile to note that Domino’s Pizza stands alone in rejecting the HSUS resolution to study eliminating gestation stalls. Domino’s chooses to trust that the experts and their proven, science-based practices to know best how to raise their animals.

Is Group Housing Better?

The HSUS demand for the elimination of gestation stalls has come despite the lack of scientific proof that group housing of sows improves animal welfare.

Thanks to the National Pork Board for this photo.

Thanks to the National Pork Board for this photo.

In fact, evaluations by scientists at Texas Tech University,  researchers at the American Veterinary Medical Association (AVMA) and in Australia show the welfare of sows in gestation stalls — which are still the majority of sows — is equal to that of those raised in group pens. Pork producers use gestation stalls to keep aggressive “bully” sows from fighting or stealing food from more docile animals, as this Missouri pork producer explains.

Change At What Cost?

While it seems the sows’ welfare isn’t affected, the elimination of stalls will have a big impact on pork producers. Dr. Paul Sundberg, the National Pork Board’s vice president of science and technology, has said that these changes could cost the average pork producer millions of dollars.

And that’s the real issue: when biased or misinformed groups force a scientifically questionable agenda it can add millions of dollars in costs and drive some producers out of business. The result could be a decrease in pork supplies and an increase in the price of pork products to consumers.

When the United Nations Food and Agriculture Organization shows that demand for food and fiber will nearly double by 2050, ill-informed regulations make little sense. Shouldn’t we encourage hard-working farmers and ranchers of the world to use every technology and production practice possible to meet the food and fiber needs of the growing world?

Tyler Kelley comes from a Northwest Missouri hog and cattle farm and now works as an AdFarm PR specialist in Kansas City.

Keeping the Conversation Straight

By Heather Koehler, March 13, 2012

Proposed Farm Child Labor Laws – Part 2

The agricultural community has been engaged in discussions about proposed changes that the U.S. Department of Labor (DOL) has put forward for the regulations governing youth labor in agriculture. While discussion is a good thing, the conversations have in some cases included speculation, and in other cases missed important points entirely.

Partially True Point #1: “My kids won’t be able to help with farm chores that help shape our values, such as a hard work ethic.” This argument is brought forward in opposition to the proposed changes. It is somewhat true and also somewhat false.

A long, hot summer on the Koehler farm.

A long, hot summer on the Koehler farm.

The truth is that after receiving a strong response from the farming community, the DOL says it has changed its stance on the “parental exemption.” This exemption states that farm owners or operators’ children of any age will still be able to perform any activity otherwise prohibited to workers deemed too young. This exemption is supposed to include a farm organized as a corporation or partnership, as long as the parent has a “substantial interest” in the farm.

The term “substantial interest” remains vague. The farm community will have to monitor how the DOL defines it. Another unknown is whether grandchildren could work on their grandparents’ farms or nieces and nephews on uncles’ or aunts’ farms.

There should be another opportunity for public comment on the parental exemption in a revised DOL proposal, due out in early summer.

Partially True Point #2: “FFA and 4H livestock programs will be outlawed.” This concern is mostly false. The proposed rules apply to farm employees. FFA and 4H students would not be affected if they are performing animal husbandry on volunteer time, i.e., as long as they are not paid for their time working on FFA or 4H projects.

For FFA and 4H students who are interested in animal husbandry and who do not have farming parents, the proposed changes make high-school jobs like caring for livestock very difficult. Anyone younger than 16 years old would not be allowed to be paid for:

  • branding, breeding, castrating, dehorning, vaccinating, or treating sick or injured animals;
  • working in a yard, pen or stall with an in-tact stallion, boar or bull older than 6 months of age, a sow with suckling pigs, or a cow with a newborn calf;
  • catching or cooping poultry;
  • or herding animals on horseback, using motorized vehicles including ATVs, or in confined spaces such as feedlots or corrals (so basically any herding).

Remember, farmers’ children will be exempt from these rules. But those grandkids, nieces, nephews and children of parents who own a “less than substantial interest” in a farm corporation or partnership are still TBD.

Missing Point of Discussion: The proposed changes will reduce the maximum height at which hired farm workers under age 16 may work. It reduces the maximum height from the current standard of 20 feet to just 6 feet. This would include work on structures, ladders, vehicles, machines and implements.  So no more working in a haymow or stacking hay on a wagon or climbing to the top of a newer model combine or sitting on top of a detasseler carrier. This rule change could eliminate a large number of summer jobs for high-school kids in rural areas.

The farming community needs to keep focused on the DOL’s proposed rule changes. They could alter the way in which many children grow up in rural America, developing their love and respect for farming. Stay updated by viewing the Department of Labor website dedicated to the subject.

What other proposed changes do you think the farming community should question?

Heather Koehler works on the AdFarm public relations team. She and her brothers grew up working on her family’s eastern Pennsylvania farm that has employed the talents of young adults for years.

Free to Be [Fill in the Blank]

By Sarah Kolell, March 8, 2012

After breakfast this morning, I spent time doing a few of the things I love. Played with my toddler, did some writing and then headed into work. The morning was full of things needing my attention, though I didn’t need to worry about the hens that laid the eggs in my morning scramble. Or growing the peanuts that topped my toast, or whether or not a freeze would ruin the orange crop and limit my juice.

America’s farmers were on top of those things, freeing me up to do my thing.

In the course of history, it’s pretty recently that farmers have increased production to a point that frees up the other  97.5 percent of the population for their respective pursuits. Here are a few fun facts:

  • The United States is one of the most advanced countries in the world because fewer farmers have continued to produce more and more food for the rest of society.
  • In 1790, farmers accounted for 90% of the U.S. labor force.
  • Today only 2.5% of the U.S. population produces enough food for everyone else in the country.
  • Due to improved farming techniques, modern machinery, and technology, today’s farmer on average produces enough food for 155 people.

March 8th is National Ag Day. The official theme for the day is Agriculture: Affordable, Abundant, Amazing. In recognition of this theme, the talented folks at AdFarm have contributed to a video featuring the reflections of people who don’t work in agriculture but who, as a result of the contribution made by farmers, are free to do more with their lives.

You can watch our video here.

We at AdFarm, and myself personally, are privileged to work with and on behalf of, farmers around the world. Farming isn’t just a job. It’s a lifestyle. The commitment is huge and we are grateful for the work of farmers who feed our rapidly-growing world.

Thanks, farmers.

Sarah is a Minnesota farm kid turned communicator and AdFarm’s Director of Public Relations in the U.S. She tweets about ag, politics and parenting @skprkc