In agriculture, uncertainty is certain
By Glen Cope
For the Capital Press
Any farmer will tell you that with agriculture things don’t always go as planned. In fact, farmers often refer to farming as a gamble. We never know from the beginning of each growing season if our efforts will pay off in the end.
A farm, like any business, is subject to many different variables that can each be vital factors in achieving a profit. One variable that sets agriculture apart is Mother Nature. The weather, when cooperative, can be a farmer’s best friend in terms of raising successful crops and providing ample forage for livestock.
However, many times it has proven to be one of agriculture’s biggest adversaries. Both the widespread drought of 2012 and the more regional droughts during the previous year are prime examples of what a lack of moisture can do to food production.
The flip side of that extreme is too much moisture. What farmer in the Midwest could forget the Mississippi River flood of 1993, which completely covered entire fields with water, drowning 20 million acres across nine states. Other examples of the tough hand Mother Nature can deal are frost, wind and hail damage to crops and infrastructure, which can also be common occurrences on the farm.
Another uncertainty that many farmers find equally as frustrating as the weather is market fluctuations for the crops they grow. Aside from normal supply and demand pressures on the market, other influences include the state of both the global and U.S. economies, growing conditions in competing countries and even hedge fund managers, who may find agriculture commodities attractive investments one day and completely pull money from them the next.
Farmers always try to plan for a small profit after crops and livestock are sold. However, one can imagine the disappointment when something completely out of a farmer’s control causes the market to plunge. This uncertainty can make financial planning difficult for the best of farmers. This is why the phrase “farmers are price takers not price makers” is often heard among the people who make their living off the land.
With all the unknowns related to farming, it is extremely important that some of the risk be reduced. It is high time that our policymakers give farmers some assurance that if another bad weather year occurs, they won’t be financially ruined because of the high cost to put out a crop. If it were not for crop insurance, it would have been nearly impossible for even a debt-free family farm to survive a year like 2012.
Crop insurance allows farmers to farm for another year. If another 1993 or 2012 occurs, many farmers will be forced to sell out because they have so much invested in the crop before it is even harvested. In light of all the uncertainty of farming, farmers need Congress to pass the farm bill and save the farm when disaster strikes again.
Glen Cope is a fourth-generation cattle rancher from Missouri. In 2012, he served as chairman of the American Farm Bureau Federation’s Young Farmers & Ranchers Committee.