Insurance Insider Vic Morrison Shares His Pro Advice to Help Producers Manage Their Financial RiskTue, 24 Jul 2018 11:25:02 CDT
Cattle producers attending last week’s Oklahoma Cattlemen’s Convention had the opportunity to learn about risk management and crop insurance programs available to them that can help offset some of the financial stresses that accompany the daily operation of any farming or ranching business. Vic Morrison, regional sales manager for Diversified Crop Insurance Services, led that discussion during the OCA’s Cattlemen’s College Session dedicated to risk management strategies for producers to consider. Morrison talked about the importance behind having a well-thought out risk management plan in place for business owners and what tools are available to help them implement one specifically tailored to their individual needs. He boiled some of that advice down in an interview with Radio Oklahoma Ag Network Associate Farm Director Carson Horn, which you can listen to by clicking or tapping the LISTEN BAR below at the bottom of the page.
“The times we’re living in, there’s so much vulnerability and risk in what we’re doing. One disaster can literally wipe an operation out,” Morrison said. “So, something I’m proud of is providing risk management tools that can help us withstand some of those things. I want to see people succeed, not fail, and these tools can help us do that.”
One of the primary programs Morrison offers through his company is part of the Federal Crop Insurance program, used to assure that certain production goals a producer has for his or her crop is met. This is a very standard program many farmers are familiar with and is often requested of Morrison. However, one of the lesser known programs offered, but equally beneficial, is the Livestock Risk Protection program, or LRP. Like all of the policies Morrison offers, this one is very flexible and can be completely customized to best fit a producer’s operation.
“The LRP is one of those programs that if you are a budget-conscious person and it’s important to you to know what you’re going to have at the end of the cycle… the LRP will provide that,” he said. “Essentially, you’re establishing a price that you are going to receive for your cattle at the end of a cycle, therefor reducing some of the risk from a market crash or something - guaranteeing a price basically.”
The great thing about this program, he says, is that you can always have the chance to actually do better - but you’ll never do worse. And in some cases, he says there is the chance producers can actually benefit from fair market prices and still receive the benefit of their policy making it a win-win situation. Having a policy like this has become especially important these days, Morrison insists, referring to all the political noise currently ongoing that can potentially have great impacts on the agricultural markets as the industry is already experiencing.
In addition to this, Morrison also recommends for the producer with large parcels of grazing land who relies on grassy pastures to feed their herd, to consider securing a Pasture, Range and Forage policy, or PRF. This is one of Morrison’s personal favorites as it is very affordable and relatively inexpensive. In fact, the federal government even pays a large percentage of the premium.
“In dry times, the PRF will replace some of those feed costs that are incurred to sustain a herd of cattle,” he explained.
As a grid-based program, though, there are things about it that a producer interested in purchasing one should be aware of and understand beforehand. For instance, the formula used to compile rainfall data can in some cases show a significant difference in what happened on your property compared to maybe a neighbor just a few miles down the road. Overall, though, Morrison says looking over the 20-year historical data on this program, it has given producers a positive return on their investment. According to Morrison, though, the best way to get your arms around the program is to visit with your crop insurance agent and do it early. The signup window does not close until November 15th which Morrison says gives producers plenty of time right now to make all their considerations.
“Waiting until the last-minute causes rushed decisions,” he said. “Getting with your agent early and seeing what’s available, having time to think things over and process those thoughts I think is key to a good risk management program.”
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