Economic Tidbits

Risk Management Education

Risk Managment Challenges Over Next 5 10 Years

The challenges facing agricultural producers grow every year. Price volatility, new technologies, external market shocks, global economic disruptions, trade disputes, production challenges, policy changes, and more can affect farm and ranch bottom lines. Farmers and ranchers must manage the risks posed by these challenges to remain economically viable. Helping producers manage, adapt, and overcome these risks is the mission of the Extension Risk Management Education (ERME) program.

The University of Nebraska-Lincoln hosts one of five risk management education centers around the country under ERME. The center supports risk management education through the issuance of grants for educational projects across the North Central region which stretches from Kansas to North Dakota in the west to Michigan and Ohio in the east. The projects address five broad areas of agricultural risk—marketing, production, financial, legal, and human. Since 2001, the North Central center has funded 422 projects. Recent projects funded in Nebraska have included Financial Viability Programming for Nebraska Women in Agriculture led by Jessica Grosskopf and Farm Survival, Understanding the Role of Risk Exposure in Financial Decision Making by Glennis McClure. To learn more about the projects funded, go to http://ncerme.org.

Central to the center’s efforts is to understand producer risk management needs. To that end, farm bill education programs hosted by Nebraska Extension and Farm Service Agency in late 2019 and early 2020 asked participants to identify the biggest challenges to the success of their operations over the next 5-10 years. Figure 1 provides a picture of producers’ responses. The larger the font, the more the word or phrase was mentioned by participants. It’s clear a variety of challenges were on participants’ minds: profitability, marketing, cost control, price, farm transition, weather, trade, were mentioned frequently. Technology, machinery cost, business growth, and property tax less so.

No doubt the challenges and risks in agriculture are intensifying. Programs like ERME can help producers understand the risks, analyze them, and implement practices to address them.

Figure 1. Risk Management Challenges Over Next 5-10 Years

Risk Managment Challenges Over Next 5 10 Years

Source: Risk Management Needs and Challenges for Agriculture, Bradley D. Lubben, Cornhusker Economics, August 12, 2020.

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