How comfortable are you with risk? Do you need all your financial bases covered before you begin a project, or does the pressure of the unknown motive you?
Farmers are intimately familiar with risk because there are so many variables beyond their control. Fluctuating input costs, market prices and weather conditions are among the biggest. In the midst of this very risky business endeavor, their courage continues and we are thankful everyday we have an abundance to eat!
I remember riding with my dad in his farm truck. We drove around so many green fields that all looked exactly the same to me. What could his eyes see? How could the next rice field look any different than the other nine we had slowly circled?
Looking Out Windows
But I didn’t mind. I enjoyed having the windows rolled down, looking for snakes and turtles in the ditches and being with my daddy. On many warm afternoons I dozed off for a while, especially if one of his farming buddies joined us and they talked shop.
When to Sell
As a kid, I didn’t realize that these farmers were strategically watching the market prices and trying to know when to lock in the best price for their crop. “Three dollars is really high for rice right now” I would hear one say. Another would reply “I don’t think it will ever reach four”. Some years it didn’t, some years it did, but no one could have known before a seed was even planted earlier that Spring.
Unknowns on All Sides
A farmer confidently runs his operation with many unknowns on both the cost AND return sides. Some business models are based on signing contracts spelling out exactly what is expected of each party involved. Other models give bids after careful calculations of material or labor costs that change little before the project’s completion. Not so with farming.
While a farmer always tries to use as little expensive chemical as possible, he can never know for sure what pests will begin eating away at his crop mid-season or which disease or fungus will bring mold that will deteriorate the sturdy stalks.
Fuel and Other Unforeseen Costs
Who ever knows how the fluctuating oil and gas markets will drive fuel prices in the next month, much less six months, which is a typical growing season? So a farmer can’t predict the cost of fuel for a tractor to make a pass over the field. This could be a dry year. If so, he will have a high electric bill to pay for pumping water to irrigate. Although farmers spend much of the slower winter months refurbishing their equipment, many parts and maintenance costs are required throughout the season but he can’t know how much. After all the unpredictable inputs, he now must try to get the best price for his yield.
Weather is impossible to predict, and it effects almost every aspect of farming. Rain and wet fields can create delays during optimal planting time, as tractors can’t drive through the fields in wet conditions. High winds gusting when it’s time to apply fertilizer and chemicals make it impossible for the ag airplanes to fly. Extreme heat during the summer growing season scorches tender plants and sometimes rushes plant development which brings low nutrient levels.
And just when the farmer has fully invested in his crop and put his hopes in bringing a bountiful harvest to provide for his family, rain and wind can blow the entire crop down overnight. This makes it more expensive, if not impossible, to harvest. Because the combine, which is the equipment used to harvest grain, must drive so slowly to pick up the “down rice” in the picture above, fuel and labor costs are greatly increased.
Listening to the Weather
In our house growing up, the weather radio was strategically placed in the most receptive window with the antenna extended as far as possible. This special radio only received one station that repeated the weather every 15 minutes. I think my dad got it for his birthday. He was thrilled! I used to sit by him in the sun room and wait quietly until they announced the forecast for the next 24-48 hours. There was no immediate accessibility to the hourly predictions or the 15 day forecasts we have in our pockets now. Even when he heard the report, there was little he could do about it. He would look at me with resolution and say “We’ll see”. Then the two of us could visit.
Agriculture Professionals are well aware of these risks and continue to courageously develop their operations for the good of their families and ours. And just like many other business owners, they don't want to be doing anything else!