Topic #3 Business Risk Management

[ianben]

Nice try Steve but they all know up here without the CWB and EU/US subsidies everything would be just fine!!!
Soma chance!!!
Cant think about anything else till they are free

[TOM4CWB]

ianben,

On risk management I said:

"Isn’t it like for some the CWB pooling is the perfect risk management tool, while for others Pooling is a unneeded cost that restricts and distorts business decisions?

Isn’t the freedom to choose, which means the freedom to lose, the only farm management answer?"

Did you miss this part Ianben?

I hope the point of risk management is that we are actually allowed to choose... for if we cannot choose to manage our risk, we are helpless to improve our management.

I was just thinking, what about buying rainfall calls during harvest to insure quality?

[ianben]

Tom
I have admired your skills as a manager and see your points on on the CWB but neither of us seems to have improved things since we met on this site.
I stll believe we could achieve something by comparing prices like we did with canola.

Are there not two ways of managing risk?

Insuring it or reducing it.

Your harvesting risk could be reduced with more combine power or perhaps a dryer

This is what I would like us to try to do with prices.

Find a way to reduce risk.

I think this an area where could make some real improvments using the comunication technology avaiable today.

I am not saying we will no longer need insurance but if we reduce the risk we also reduce the premium.

If it worked real well the CWB might just fade away or everyone would agree it was nolonger necessary.

[TOM4CWB]

ianben,

I believe that improvement has occured on Canola for example.

We said that $7.00/bu was a price that we could make a profit at, yet this price has been avaliable for many months for fall 2002, and how many people have priced canola?

The opportunity to control risk does not mean that we must, the prudent control of risk, when it is appropriate is the recipe for sucess.

Figuring out when risk management is needed and when it is too expensive is the trick.

No formula can tell us when to make these decisions, intuition and farming are hand in hand, those with these giftings to "know when to hold, and when to fold", will be most sucessful.

I believe this is the biggest loss to the farming industry, our younger generation.

How do we create enough wealth to rightfully deserve our younger generations interest in the farm?


Feeding the worlds hungry is a big responsibility, even if the G8 countries don't think it is important.


Injustice has and will always be with us, how do we make the best of what we have?

If I see looming weather on the horizon that could cost my farm big $$$, wouldn't it be prudent to buy some quality insurance so I can pay the drying and extra harvest costs?

[ianben]

Tom
Canola is better at the moment because of weather events curbing production in both our counties,
We did nothing to influence it. You may have taken better advantage of it than me and good luck to you!!

Earlier you asked if the present situation was sustainable.

I guess my answer to that is, it must also depend on the weather. As in my view it is the only thing fixing our prices.

Like you I would like to see the hungry fed and my family able to consider taking over the farm.

Again are we getting any nearer to that happening?

Until we learn a way to reduce some of our risks the premium to insure them will be too great and the young unable to afford to take the risk
There is a thread in rurral issues on moaning about bank charges to farmers.
High risk loans have high costs, while we are high risk we will have to pay.

In an ideal world the best way to manage risk is to remove it.
The next is to reduce it then insure it.

Take auto insurance
The all inclusive, any driver,replacment car package is expensive. Name the driver, small excess, and a few minor exemtions and the cost halves.

This is how if we reduced risk on price by price monitoring we would reduce costs for the next generation.

Something together we could really do and see results!!!

[TOM4CWB]

Charlie and Lee,

I sure hope the AB gov/AFSC crop insurance had their risk management together... how much are the outstanding liabilities on crop insurance, maybe a $billion???

I will start a new thread on this one, I think a good discussion is needed!!!