Agricultural News
Apache Farmers Co-op Prepares Launch of Comprehensive Risk Management Service
Tue, 15 May 2012 15:55:14 CDT
Davey Jones, the finance manager for the Apache Farmers Co-op has been watching agriculture change. It's easy to see how technology has changed over the years, but it's not always easy to see how the finances of production agriculture have changed.
"In a lot of ways co-ops and other farm supply institutions have changed with the times, but I think in the financial area we've probably not adapted nearly so quickly. I think there's a pretty big gap in the information and services that are needed and the information and services that are provided to the average ag producer out there."
It is in providing the right information and financial services that, Jones says, his co-op will be able to provide additional benefits to its members.
"Our goal is to come alongside our members in a partnership to say 'We know you're good at what you do. You can produce your crops. You can take care of getting the end product ready to go, but there's multiple risks out there and we all know that those risks exist but we don't do enough to identify them and prepare for them and to manage them.'"
One of the major areas of risk management that is not often considered, Jones says, is input costs. Input costs have skyrocketed.
"Fertilizer is about $1,000 a ton today. It was $200 ten or 12 years ago. As those costs have gone up, the risk has gone up. The need to manage a risk when it's at a 300 percent increase is 300 times more important than it was just ten or 12 years ago. Things that today would put you completely out of business ten or 12 years ago might just have been an inconvenience. We think that with the increased cost of production, the need for risk management has gone up right along with it."
Managing that risk can be done, Jones says, but it, too, comes at a cost of time and effort. That's where he thinks he can offer a valuable service to his co-op's members by creating an "overall risk management strategy that would include not only insurance products, but also purchasing inputs, acquiring financing, having the end product marketed at prices that allow you to be profitable to stay in business."
Jones says implementing his one-stop-shopping strategy for overall risk management, insurance, financing and crop marketing is in its infancy, but it is a project he's been working on for years. He said he hopes to introduce it to co-op members within the next few weeks. He says he's waiting for wheat harvest to wind down before he sits down with members to present his ideas. He says he hopes to have conversations where he can learn as much about his members' operations as possible in a short period of time so he can come up with a comprehensive plan that matches each producer's unique goals.
"Then, you can go back work cattle, swath hay, do whatever you need to be doing, and we'll put together some ideas of other things you might want to do or different arrangements of how to manage those risks, then we'll get back together and spend a little time, look at it. And if you see something that makes sense to you then you can take that and get it implemented elsewhere or you can ask us to get those changes implemented for you. And then you go back to work and we go back to work doing the things you have a hard time finding time to work into your schedule."
Whether the operation is large or small, Jones says there are a lot of tools on the market that will help each producer better manage risk while achieving unique financial and business goals.
You can hear more of Davey Jones' conversation with Ron Hays by clicking on the LISTEN BAR below.
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