Ag Instructor Vic Martin: Managing Risk In Turbulent Times

Great Bend Tribune
Part I
Published May 21, 2017

Risk plays a part in everyone’s life but for those in livestock and crop production risk is a constant companion, impossible to avoid.  Recently this column discussed the safety and health risks associated with agriculture.  The economic risks of staying in the production business have and are constantly in the news with the production costs and commodity prices of the last few years.  Today, let’s focus on agronomic risk – all the things that can happen to negatively impact production and ultimately the bottom line.  The USDA even has the Risk Management Agency designed to help producers cope with risk.  A major part of government help for producers revolves around crop insurance when crops fall below expectations or fail.  There is another major factor in managing risk – the agronomic decisions producers can make to minimize their economic risk.  While any producer can tell you it’s impossible to eliminate risk, it’s possible to position an operation to minimize risks to crop production.  This week’s column, though it may seem obvious, will identify these production risks.  Next week will focus on how to manage them.  

The Business Dictionary defines risk management as: “The identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks.  In crop production for the sake of this discussion, we will break them into preventable, somewhat preventable and unavoidable risks.  Understand that there is some overlap between these and the definition is designed to indicate those risks that can be more easily avoided, though it may take time, compared to those that are unavoidable and less easily mitigated.

Preventable risk:

  • Soil environmental problems such as acid soils, fertility issues, poor soil structure, drainage, wind and water erosion, compaction.
  • Some pest pressure including diseases such as soil borne mosaic virus in wheat or soybean cyst nematode.  Weeds such as cheat grasses and feral rye in wheat.  Insects such as corn rootworm or wireworm.
  • Items such as plant population, crop selection, crop maturity.
  • Herbicide damage to crops.

Somewhat preventable risk:

  • Other pest pressures such as rust diseases in wheat and certain insects such as Hessian fly.
  • Certain weather conditions such as frost free

Unavoidable risks:

  • Weather which seems like a no-brainer but even here there are procedures to help.  The focus here are events like the spring snowstorm in April or the tornadoes and hail here recently.  For us the major unavoidable widespread weather events are heat and drought.
  • Certain diseases and insects which you will notice appear in all three columns.  Some pest pressures are easily avoidable, some preventable through various means, and some you can do nothing about.

There is more but that provides a template for how producers can manage risk in next week’s column.

 

Part II
Published May 28, 2017

Before today’s topic, here’s hoping everyone is enjoying this Memorial Day Weekend.  And that we will all make time tomorrow to honor those who gave their lives in the service of this country through the military, law enforcement, and our safety services.  Last week’s column discussed the production risks producers deal with as they produce food, fiber, and fuel.  These risks directly relate to the management of economic risk.  For convenience we divided these risks into three broad categories: preventable, somewhat preventable, and unavoidable risks.  This divides risks not by the level of severity but how we can deal with them.  So what can we do to manage the risk discussed last week?

Preventable risks include acid soils, certain diseases and insects, weed pressure, over or under planting, and herbicide injury.  Management strategies include:

  • Soil testing for pH and nutrients.  There is no reason with as cheap as it is not to know the chemistry of the soil.  Even if a producer can’t afford to lime, they can adjust crops, cultivars and perform other practices to minimize risk and optimize production.
  • Know the insects and diseases endemic on your acreage.  These are pests that aren’t blown in on the wind easily but are always present.  Select tolerant or resistant hybrids.  Use appropriate seed treatments.  Rotate crops that fit your land, climate, and markets.  Vary the modes of actions when using pesticides.  For soilborne pests, seed treat and/or us in furrow pesticides.  Practice sanitation and not just in the field but ditches, waterways, and your equipment.
  • Choose crops, cultivars, and cultural practices adapted to your long-term average environmental conditions and be realistic with your yield goals.
  • Constantly scout and examine fields.  Determine management strategies, monitor and keep complete records of all that was done.  Finally, honestly evaluate and continuously adapt management strategies.  This applies to all types of operations and risks.

Somewhat preventable risks include events like Hessian fly or rusts, frost, and so on.  These are risks that may or may not occur.  A producer can use some of the items under preventable risk but additionally:

  • Hessian fly and late or early season frosts, while not totally unavoidable, can be minimized by something as simple as planting date.  This are less preventable than the previous group since even following the recommendations religiously doesn’t mean weather conditions won’t throw a wrench in the works.  For Hessian fly, the fly-free planting date is based on the average first frost in an area.  If that frost is later than normal, as has been the case in recent years, the window for the fly is wider.  The same holds for planting and crop maturation.
  • Leaf rust falls under this category instead of being preventable for a simple reason – mutations.  It takes time to develop a wheat variety.  You may select a rust resistant variety and find out in late spring that the rust race has changed and its resistance has lessened or is gone.

Unavoidable risks need their own column and will be discussed next week.

 

Part III - Unavoidable Risk
Published June 4, 2017

Before addressing today’s topic, a few notes.  First, none of the state is even listed as abnormally dry according to the official U.S. Drought Monitor.  The closest areas are in central Colorado and the Texas/Oklahoma border.  Second, after struggling through wet conditions, the corn crop is essentially in the ground according to official statistics while grain sorghum and soybean planting progress is being made.  Finally, in spite of wet, somewhat cool conditions, the wheat crop is turning and progressing well.  The downside, for reasons discussed everywhere in past weeks, is that around one-quarter of the crop is rated in poor to very poor condition.  Now, how to handle unavoidable risk.

As a quick review, unavoidable risks include weather (hail, wind, extremes of temperature and precipitation) and certain pest pressures that are endemic, always present, or epidemic, breaking out at extreme levels for which there are few options.  Although they are termed unavoidable here, that doesn’t mean there is nothing a producer can do mitigate the risk, at least to a certain extent.

First, how can we handle unpredictable weather?  Some we can’t such as the extreme drought or hail.  What can be done is to eliminate all the other stresses we can control such as soil pH and fertility.  Based on the soils and average climate, select as diverse a crop rotation as possible, i.e. don’t put all your eggs in one basket.  If you are able to plant wheat, corn, milo, and soybeans there is less of a chance for hail and strong winds to take out all the acreage.    Don’t lock a field into certain crops if at all possible by carefully selecting herbicides and fertility so if you have a disaster, you have replant options.  Stagger planting and cultivar maturities so breaking dormancy, flowering, maturity, etc. are staggered.  Select cultivars, within limits, directing more moisture and nutrients into what you are harvesting and that are more heat and drought tolerant.  For example a shorter vegetative growth period.  Pay attention to frost free dates.  Plant as early as practical and harvest as early as possible.  Hopefully, these examples provide a good general idea of how through cultural practices it isn’t possible to totally eliminate unavoidable hazards but minimize their damage. 

A good example of unavoidable pest risk is the sugarcane aphid epidemic on grain sorghum last year.  Some of these can be handled, as in this case, by spraying while over time host plant resistance will increase in importance.  If a field is infected by something like Take All Root Rot in wheat, you have to know when you are licked and find alternative crops as the best option.  Take All is a good example of an endemic problem as are certain other diseases and weeds like field bindweed.  While there are options for bindweed, the best may be removing the bindweed portions of the field from production and specifically attacking the weed.  For something like extremely alkaline soils where no practical short term remedy exists, producers have to select tolerant cultivars of crops, foliar application of certain micronutrients, or selecting more tolerant crops.  Risk in farming is ever present and not totally avoidable but it can be reasonably managed both in the field and through insurance and other strategies.

Barton wordmark