Checklist of Key Risk Management Questions

Get these questions answered, and you’ll be far ahead of most growers’ preparation for managing production and marketing risks for the upcoming crop season.

1. What are the major risks for my farm and the likelihood of them occurring?

2. What reliable sources of outlook information do I have?

3. Do I have four or more years of production records to prove my yields?

4. Does my landlord/partner have adequate insurance coverage on their portion of exposure?

5. What coverage level do I need, and can I afford?

6. Have I learned about all of the products that are available, including supplementals?

7. What percentage of my crop can I sell with confidence before harvest?

8. Does my operating loan include enough money to cover my crop insurance premium?

9. What size of loss can I experience and still meet my cash flow requirements?

10.  What will the impact on my net worth be if I don’t have adequate crop insurance coverage?

11.  Have I certified my production history with my crop insurance agent?

12.  Have I prepared a written marketing plan that includes:

•  Production cost estimates and break-even prices at various yield          levels?
•  Minimum selling price under various strategies?
•  A clear pricing objective?
•  A clear profit objective?

13.  What is my...

•  Expected local harvest price?
•  Expected high market-price level for futures and local contracts?
•  Expected seasonal high month?

14.  How many bushels for each crop do I expect?

15.  How many are MPCI or CRC guaranteed?

16.  What is the maximum price guarantee of my insured bushels?

17.  How many uninsured bushels do I have? (expected bu. - guaranteed)

18.  How many bushels do I currently have contracted or priced?

19.  How many bushels do I have remaining available for sale?

20.  What are my forward contract objectives, or other marketing alternatives to be employed?

Source: National Crop Insurance Services and Bill Tierney, USDA.