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3. 2013 Extension Risk Management Education National Conference

Business Planning for Better Risk Management

Winifred McGee and Lynn Kime

Summary

21st Century farming has become more complex, due to an expanded marketplace (with contracts, direct marketing and global competition), more technology and complexity in production, increasing impact of regulations, and a series of economic roller coasters. Business plans – once rare in agriculture – have now become a necessity. In his Internet column, Business and Economy Trends, Dr. David Kohl (professor emeritus at Virginia Tech) observed that 90% of lenders require a written plan to make a loan, while less than 20% of farmers have written plans and of those, ¼ don’t use them. Because the core of a business plan is goals and strategies for business risk management, a written document is needed not just when loan is sought, but as a daily management tool. The USDA RMA project, Entrepreneurial Farm Management Strategies for Women Farmers and New and Beginning Producers in the Raleigh, NC RMA Region, is an educational program for producers in proactive business risk management to increase farming profitability, sustainability, and quality of life. The program stresses the importance of having a written plan so that risks can be anticipated and (as much as practical) mitigated. This presentation will provide a brief overview of the group workshop/individualized mentorship activities and immediate learning impacts associated with this project, then turn to four case studies illustrating Extension’s on-going impact through business planning in agriculture: a dairy farming family diversifying to on-farm retail, two next-generation farmers carving niches in the family farm enterprises, and a three generation, small-scale livestock operation.

Details

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