A Whole Farm Approach to Risk Management for Hog Producers Eric Olson
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Transcript of A Whole Farm Approach to Risk Management for Hog Producers Eric Olson
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A Whole Farm Approach to Risk Management for Hog Producers
Eric Olson
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Discussion
What is Risk Management ?
Back Ground Why?
Strategy for your Farm
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Definitions
Entrepreneur – A person who starts a business and is willing to risk loss in order to make money
Risk – Possibility of a Loss
Management – Act or skill of controlling and making decisions about a business
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Traditional FocusProduction- Pigs/sow- Feed Conversion- Bio-security- Grow it and it will work out
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Five years of Change
• Understanding Changes in the Industry
• Predictability
• Unpredictable Events/Trends• US Dollar• MCOOL• Ethanol• H1N1• Drought
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Strategy
Need a Goal – Target
Know your Cost of production
Know your Cash needs
Plan ahead
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Strategy
Protect Margin
Make Active Management Decisions
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Marketing Outlook
Next 12 Month Outlook – Average PricesRevenue $162.52Feed Cost $102.23Fixed Costs $ 54.70Margin $ 8.67Depreciation $ 11.00
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Information
Information Fruit
World is Small
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Information is KINGRight Information- Hog Prices- Grain Markets- Political Trends- Currency Outlook
Need to Understand - Why prices are where they are today- Where they are going
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Risk Management
Historical success in cash market
Not necessarily a predictor for future success
Market offering a profit
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Conclusion- Each producer needs to manage risk according to
their own farm situation- Make a Goal for your farm- Know your cost of production, ability to make
informed marketing decisions- No action is a decision- MARGIN - Locking in forward prices on hog prices
should be matched with contracts on feed, etc.- MAKE ACTIVE MANAGEMENT DECISIONS
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Thank-you!
Questions?