A24-lancaster Farming, Saturday, October 30, 1990 TYPES OF RISK MOST IMPORTANT TO PRODUCERS John Berry Penn State Lehigh County Extension Sources Of Risk In Farming Some risks are unique to agri culture, such as the risk of bad weather significantly reducing yields within a given year. Other risks, such as the {Mice or institu tional risks discussed below, while common to all businesses, reflect an added economic cost to the producer. Production or yield risk occurs because agriculture is affected fay many uncontrollable events that are often related to weather, including excessive or insufficient rainfall, extreme temperatures, hail, insects, and diseases. Tech nology {days a key role in produo- NOTICE!! NOTICE!! NOTICE!! NEW OSHA LAW If you presently operate a forklift loader or skid steer as a lifting device you are required by OSHA to have training prior to Dec. 1,1999. The minimum fine for non-compliance is $5,000. For OSHA Certified Training call: A. I. HCAR & BR<Pk Quarryville, PA • 717-786-3521 THINKING OF BUYING A NEW T.M.R. MIXER? Need to add hay to your TMR? Looking for more milk, butterfat and protein? Herd health also a priority? CHOOSE A mm The uniquely designed TMR mixer with no aggressive augers in its angle paddle driven mixing chamber. Preserves the particle size of your ration for more cud chewing and better digestive health. Higher performance from healthy cows fed Keenan TMR, simply a more profitable investment. Ask about our competitve finance and deferred payments until year 2000. For further information, call Keenan USA Inc. at: 1-877-KEEN AN 1, or 315-445-1648 don risk in Cuming. The rapid introduction of new crop varieties and production techniques often offers the potential for improved efficiency, but may at times yield poor results, particularly in the short term. In contrast, die threat of obsolescence exists with certain practices (for example, using machinery for which parts are no longer available), which creates another, and different, kind of risk. Price or market risk reflects risks associated with changes in the price of output or of inputs that may occur after die commitment to production has begun, in agricul ture, production generally is a lengthy process. Livestock pro duction, for example, typically requires ongoing investments in feed and equipment that may not produce returns for several months or years. Because markets arc gen erally complex and involve both domestic and international consid erations, producer returns may be dramatically affected by events in far-removed regions of the world. Institutional risk results from changes in policies and regulations that affect agriculture. This type of risk is generally seen as unantici pated production constraints or price changes for inputs or for out put For example, changes in gov ernment rules regarding the use of pesticides (for crops) or drugs (for livestock) may alter the cost of production or a foreign country’s decision to limit imports of a cer tain crop may reduce that crop’s price. Other institutional risks may arise from changes in policies on the disposal of animal manure, restrictions in conservation prac tices or land use, or changes in income tax policy or credit policy. Fanners ate also subject to the human or personal risks that ate common to all business operators. Disruptive changes may result from such events as death, divorce, injury, or the poor health of a prin cipal in the firm. In addition, die changing objectives of individuals involved in the farming enterprise may have significant effects on the long term health of die operation. Asset risk is also common to all businesses and involves theft, fire, or other loss or damage to equip ment, buildings, and livestock. A type of risk that appears to be erf growing importance is contracting risk, which involves the reliability of contracting partners. Financial risk results Cram the way the firm’s capital is obtained and financed. A fanner may be subject to fluctuations in interest HAY. STRAW & GRAIN SALE Every Thursday at 12 NOON Vintage Sales Stables, Inc. (Rt. 30,10 miles east of Lancaster in Paradise, PA) For info. (717)442-4181 bus. (610) 458-8518 home rates on borrowed capital, or face rash flow difficulties if there are insufficient funds to repay credi tors. The use of borrowed funds means that a share of the returns from the business must be allo cated to meeting debt payments. Even when a farm is 100-percent owner financed, the operator’s capital is still exposed to the proba bility of losing equity or net worth. Survey Results Several surveys have asked far mers about the most important types of risk that they confront in their farming operations. In 1996, USDA’s Agricultural Resource 'Management Study, (ARMS), a USD A Proposes Fee Increase WASHINGTON, D.C. USDA proposes to increase Lives tock and Seed Program’s seed inspection fees. Kathleen Mcrrigan, administra tor of USDA’s Agricultural Mark eting Service, said the fee increase will cover the cost of testing and issuing Federal Seed Analysis Cer tificates. Major factors contribut ing to the need for die changes in fees are increased employee sala ries, rent, and supplies. Ibe proposal would raise the hourly fee for testing and issuing certificates from $40.40 per hour to $44.40 per hour. It would abo raise the fee for Issuing additional duplicate certificates from $lO.lO nationwide survey of farm opera tors, questioned farmers as to their degree of concern about factors affecting the operation of their farms. The concerns cited in the survey varied from “uncertainty in commodity prices” to “ability to adopt new technology.” Wheat, com, soybean, tobacco and certain other producers answering the survey were more concerned about yield and price variability than any of the other categories. Producers of other field crops, nursery and greenhouse crops, beef cattle, and poultry were relatively more concerned about changes in laws and regulations. to $ll.lO. The seed inspection program is conducted under the Agricultural Marketing Act of 1946g0 a volun tary, fee-for-setvioe basis. Since the act requires that fees for ser vices must be equal to the cost of providing service, die proposed fee increases would ensure that the program is self supporting. The proposal will be published in the Oct 29 Federal Register. Comments, should be received no later than Nov. 29 and should be sent to Richard C. Payne, Acting □lief. Seed Regulatory arid Test ing Branch, Room 209, Building 306, BARC-E., Beltsvillc, MD 20705-2350.
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