Crop risk management workshops set in 11 towns

By MSU News Service

10/17/2001

            BOZEMAN -- Workshops will be offered in central and eastern Montana this fall to address producers' risk management alternatives, especially when they are considering adding alternative crops to their rotations.

            The three-hour workshops by Montana State University Extension will describe approaches to managing production risk and give time for questions by farm managers.

            "Many Montana farm are considering expanding rotations beyond their usual crops," says Jim Johnson, MSU Extension economist. "However, their ability to manage risks associated with new crops is quite different than existing crops."

            These workshops will provide information about how managers can manage the production, price and business risks associated with the crops they are considering adding to their rotations, says Johnson.

            For some of the crops producers are considering, various forms of multiple peril crop and crop revenue insurance are offered. In counties where such insurance offerings are not available for alternative crops, other production risk management opportunities are available. Farm managers can file a request for an actuarial change which, when successful, results in a written agreement for individualized insurance coverage specific to an individual producer for that crop for the current crop year. Alternatively, farm managers may rely on the Farm Service Agency’s Noninsured Crop Disaster Program.

            Management of price risk is especially problematic for many crops considered as alternatives to program crops such as wheat and barley. The workshops will address what price risk management opportunities are available for these alternative crops. Futures markets are one way to manage the price risks associated with wheat and barley, but such opportunities are limited for other crops. A futures market exists for canola in Canada. For minor oilseed crops, USDA marketing assistance loans and loan deficiency payments (when commodity prices are relatively low) are available. But such similar federal loan programs are not available for crops such as lentils, peas or dry beans.

            Because of the relatively fewer buyers for many crops being considered for expanding existing rotations, such crops are often contracted. Producers often contract these crops for delivery at a negotiated price with a specific buyer. Workshop participants will be instructed on a variety of business risks. Some of the contracts offered are subject to a number of business risks associated with such contracts, including risks associated with potential buyer and seller defaults. Issues to be addressed in the workshops will include what may happen when a seller suffers some a catastrophic production loss of the contracted crop and what may happen when the buyer is unable to pay.

 Risk Management Producer Workshops

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Send questions or comments to Carol Flaherty, MSU Communications Services, Bozeman, MT 59717 or email Flaherty at carolf@montana.edu.

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