RMA’s Success Story – A Family’s Risk Mitigation Strategy Provides Farming Safety Net
American farmers and ranchers like Rick Wise know the importance of producing quality food for the table as well as for livestock. And they know the value of risk management to ensure they can provide year after year.
The Wise family has been farming in Pennsylvania since 1837. Mr. Wise owns 700 acres in Jefferson and Clearfield counties, where he and his sons grow wheat, corn and oats, among other crops. But it is the hay, alfalfa and pasture land that they grow that are the core of their business, because the family farm annually averages about 140 to 160 Angus cows. Mr. Wise takes pride in producing quality cattle each year and works very hard to ensure that his crop productions are at the average yield or better.
The Risk Management Agency (RMA) administers the federal crop insurance program as a tool for American farmers and ranchers to plan for smart growth and economic sustainability as part of their risk management strategies. Apart from individual crop production policies, there are specific policies for livestock risk protection as well as forage protection. These policies form the basis for a sound farm safety net.
Part of Mr. Wise’s risk management strategy to ensure his family can continue to farm year after year has been to purchase federal crop insurance. He recently bought forage production insurance due to the unpredictability of rainfall. RMA has a few insurance options for pasture, rangeland and forage, commonly called PRF, for ranchers to choose from. The Rainfall Index policy is based on weather data collected and maintained by NOAA’s Climate Prediction Center. The index reflects how much precipitation is received relative to the long-term average for a specified area and timeframe. The Forage Production Index is based on is based on NASS county level hay yield data (all hay or alfalfa hay). The index reflects how much hay is produced relative to the long-term trend for the county. Mr. Wise likes that his insurance policy allows for him to also insure his pastures, which he considers to be a very important part of his operation. Mr. Wise points out that with the rainfall based insurance he is able to spread his risks out over the entire year.
According to Mr. Wise, his family has exercised several risk management strategies and he hopes that they can continue to lead by example. He is confident that his business will continue to be successful in view of this crop safety net, and his sons will continue to be able to farm based on the steps he’s taken to insure against risks.
To find out more about crops or livestock insurance, visit RMA’s web site at www.rma.usda.gov/policies/2013policy.html.
Montana FFA Students Learn Strategies to Succeed in a “Risky Business”
When most Americans envision a farm or ranch, pictures of lush pastures, ripe wheat fields, and grazing cattle come to mind. Yet for the small percentage of Americans operating a farm or ranch, the images are not always as picturesque. Farmers and ranchers today face numerous challenges such as high input costs, soaring land prices, and economic uncertainty, just to name a few. One group that has especially felt the pressure of these challenges is beginning farmers and ranchers—which is why Custom Ag Solutions (CAS) has created an educational program to help these producers manage risks.
Through a cooperative agreement with the United States Department of Agriculture’s Risk Management Agency (RMA), FFA members across the country have received hands on training about risk in agriculture. CAS, based in Cowley, Wyoming, has developed a program called “Farming is Risky Business” which allows students to participate in simulation game that represents actual risks and outcomes that can occur in agricultural operations. CAS estimates they have reached approximately 44,000 beginning farmers and ranchers from the United States through their education efforts. In the Billings Region alone, CAS has completed over 400 sessions since 2004, and reached over 11,000 beginning producers.
At the 2013 Montana FFA Convention CAS held 10 sessions, and nearly 400 FFA members attended. In the sessions, students participated in a competitive farming simulation game. Each student was able to make management decisions and choose between risk management options on a “virtual farm” via a computer program, and after each decision was made, they were able to see how the decisions impacted their operation. Additionally, participants could see the decisions other students made, and how those choices impacted profitability. Each decision was based on real life risk management choices, and allowed students to learn about risk management options available and how they can impact their bottom line. The CAS instructor received rave reviews from the attendees, and the FFA members especially liked the ability to compete with other students from across the state for the prize of “most profitable” farmer. CAS creates a high energy, energetic learning environment, and some students enjoyed the presentation so much, they came back for a second session. Although the virtual farming game was fun for students, there were also valuable lessons to be learned about the importance of crop insurance, futures and options, purchasing land, and mitigating risk.
CAS and RMA are investing in the future of agriculture with their “Farming is Risky Business” program. There are numerous challenges facing beginning farmers and ranchers, and CAS is introducing risk management techniques early so that when FFA students operate their own farms and ranches they think about the importance of mitigating risk. Through strong education programs and collaboration with groups like Custom Ag Solutions, the Risk Management Agency is aiming to take some of the risk out of the “risky business” of agriculture.
Building to the Future: Helping Alaska’s Specialty Crop, New, Women and Other Farmers Understand and Prepare to Implement Crop Insurance and Other Risk
Alaska’s climate, location and distances to markets create unique challenges to agriculture in the state. Evolving technologies and newly discovered markets are two drivers of this expanding agriculture. The USDA Risk Management Education Division and RightRisk LLC partnered together and successfully completed a two-day workshop for Alaskan producers on March 21 and 22 with local host Alaska Farmland Trust. Workshop topics included: 1) an overview of risk, sources of risk, and personal risk preferences; 2) goal setting and business planning; 3) transferring risk via crop insurance; 4) understanding risk using a risk simulation model; 5) the feasibility of alternative enterprises; 6) introduction to the strategic risk management process; 7) record keeping; 8) measuring financial performance and benchmarking; 9) tax management; and 10) legacy planning. Another significant activity included two workshops at the 2013 Alaska FFA State Convention (Fairbanks) on April 25th. Forty-three beginning FFA students learned how to strategically utilize crop insurance, forward contracting, crop rotation and diversification as well as general management practices to effectively manage production and market risks.
Greenmarket GrowNYCTechnical assistance in the area of recordkeeping and financial preparedness leads to an exciting marketing outcome as a result of this project. Hector
Tejada, an immigrant producer from Ulster County, NY worked with FARMroots staff to develop recordkeeping systems to meet his goal of securing a loan and eventually farmland. Through this assistance, staff learned of a new crop at his operation, Conuco Farm. Mr. Tejada started growing moringa, a leafy green he discovered while traveling in his native country of the Dominican Republic. The crop has many uses and is of growing interest due to its health properties but had never been offered fresh in the New York City marketplace. FARMroots Communications Associate Maria Rojas provided direct marketing assistance to Mr. Tejada. He was in need of visual aids to explain the use and flavor of the crop. Staff translated outreach items in English and Spanish. Using these marketing materials, promotion of the farm was pitched to WNYC, one of the largest public radio stations in the country. Beginning Farmer Coordinator Chris Wayne appeared on air to promote GrowNYC programs and moringa, the new crop in market. The story ran during prime listening hours and was posted on the home page of WNYC. This coverage increased traffic to the FARMroots webpage and email newsletter subscriptions. Unique ethnic crops are important drivers for farmers’ market customers. This promotion has increased sales for the farmer and has encouraged him to maintain records on the impact of sales.
Appalachian Sustainable Agriculture Project
At ASAP’s Business of Farming conference, a daylong conference that provided 250 farmers in the region with critical resources to minimize risk and access opportunities in local markets, ASAP coordinated a ‘farmer-buyer matchup’ for new and beginning farmers and the buyers for groceries, restaurants, and institutions. From this networking opportunity, William, a Western North Carolina farmer, secured a market for his new Mountain Majesty tomatoes with the Ingles regional grocery store chain. As stated by William, “I am going to sell them all I can grow for a great price.”
Emerging Farmer Training Project for New and Beginning Hispanic FarmersThe USDA Risk Management Agency and Adelante Mujeres, Friends of Zenger Farm and Multnomah County (Oregon) collaborated on the delivery of the Beginning Urban Farmer Apprenticeship and Emerging Farmer Training Project programs. Group and one-on-one technical assistance from project partners provided culturally appropriate access to risk management tools related to production, marketing and finance among immigrant and emerging farmers. The project built-upon the existing food sector and farm partnerships in the upper Willamette Valley and Portland metropolitan area, a region that encompasses both urban and rural areas. The project successfully addressed the needs of new, beginning, women and Hispanic small acreage and specialty crop producers through: marketing via Community Supported Agriculture (CSA) and cooperative marketing; record keeping; safety in harvesting, packing and storing fresh produce; market analysis and consumer behavior to ensure successful delivery and access to food; and good farming practices. The partnership has seen a significant success towards enhancing farming practices and marketing skills for all participating producers. RMA substantial involvement included crop insurance information, RMA’s Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis tool (Ejercicio de Análisis SWOT) and availability of FSA Non-Insured Assistance Program. The cooperative agreement is part of RMA 2012 RME partnership program.