Writer: Blair Fannin, 979-845-2259, firstname.lastname@example.org
BRYAN – Agricultural producers both young and old learned practical risk-management techniques in farming and ranching at the recent Next Generation of Agriculture Conference, held recently at the Brazos County Expo in Bryan.
Dr. Mark Welch, Texas A&M AgriLife Extension Service grains economist, College Station, advised farmers to be low-cost producers through input efficiency, crop rotation, use of hybrids and soil testing.
“To be profitable in today’s farm economy, you’ve got to be an efficient, low-cost producer,” he said.
With commodity prices continuing an upward swing, Welch said it might be wise to lock in prices when on the upside instead of “timing the market.”
“You can use cash-flow projections and crop insurance as a safety net,” he said. “But before any of this, you must have a marketing plan. If you do none of this and no pre-harvest pricing, you are a speculator in the cash market. You accept all the price risk between now and whenever you decide to sell.”
To fend off potential price risk, Welch said farmers can use futures contracts to hedge against fluctuating commodity prices during the growing season.
He said this could be part of a farmer’s marketing plan rather than going into the market blindly.
“The basic idea of a marketing plan is to consciously decide the criteria you will use to make a marketing decision, such as covering your costs – or costs plus a percentage – or to sell in the top third of the market. Maybe your crop insurance choice is all the revenue coverage you need. Otherwise, we are either forced into making a marketing decision by other financial needs or marketing becomes driven by emotion, fear and greed, and may not result in the best marketing outcome.”
The next conference is scheduled for July at the Taylor County Expo Center in Abilene.
The conferences are hosted by Capital Farm Credit and AgriLife Extension. They are designed to help the next generation of producers transition into the business, or to help current farmers and ranchers expand their operations, providing production and financial management tools.
For more information about the conferences visit https://www.capitalfarmcredit.com/.