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Managing Your Farm Risks

There are ways of mitigating losses so that you can ensure your farm and livelihood is able to withstand the ups and down of markets and weather.

So what can you do to reduce risks in your farming business? While you cannot eliminate risks completely, you can participate in programs that help to reduce risks, such as AgriStability.

AgriStability provides a sense of security for farmers because it protects them from large declines in their farming income caused by production loss, increased costs, or market conditions.

At the end of the year or selling period, if the farmer’s net income is lower than what they normally make – i.e. experiencing a large margin decline – the government will pay whatever the difference is through the AgriStability program. To be compensated for losses, production margin have to fall below 70% of the typical income made in a season. The AgriStability program uses margins to determine compensation.

There are two types: program and reference. Program margin is determined by subtracting allowable income from allowable expenses in a given year or growing season. It also takes into account any adjustments related to inventory and receivables. These adjustments are made in accordance with the information provided by the farm owner.

Reference margin is a farmer’s average income over the previous three to five years. Because thare are always aberrant years for money made or lost, the lowest and highest margins are not included in the calculation. Whatever the lowest historical number is for earnings serves as the reference margin. Once these factors are all accounted for, a farmer is compensated if their margins fall below 70% of their reference margin.

There’s no one right answer to protecting your losses. What’s important is finding the right plan for you and your farm. FBC can help you make an informed decision. We will help you assess your risk, understand the ins and outs of each program, along with what steps are needed to initiate that plan. The decision is yours, but FBC can help walk you through the options so that it’s as seamless as possible.

A Snap Shot of FBC Members

· 1 in 4 FBC Farm Member participate in AgriStability

· 17% of participants received a benefit

· Benefits received last year totaled $7.6 million

· The average payout per eligible Member was $21,093

From: http://www.farms.com/expertscommentary/managing-your-farm-risks-105798.aspx

Posted in Latihan.


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