Production Risk
Often the first thing that comes to mind when discussing farm risk is the risk of crop losses due to weather, pests, disease, genetics, machinery problems, and/or inadequate input management.
Some strategies to deal with production risk include:
* Diversification: Growing a variety of different crops can protect against some production risk, however, many specialized farms that have a large financial investment in machinery specific to one crop may not have the option to grow a variety. There are other types of diversification that may help though. For instance, diversifying income sources by getting off-farm income for yourself or your spouse, or looking into on-farm renewable energy production.
o CVPS Cow Power
o Earth Turbines
o Calculating On-Farm Renewable Energy Production: The Feasibility of Farm Energy Self-Sufficiency in Massachusetts by Jericho Bicknell
o "The Market Potential of Farm-Scale Oilseed Crop Products in Vermont" by Emily Stebbins
* Investing in new technology: Sometimes the greatest risks to your crop production can be mitigated by investing in new technologies. For example, if low rainfall is a common occurrence in your area, think about installing irrigation equipment. If early frost is an issue, think about investing in frost protection.
* Have strict maintenance protocol for all equipment.
* Purchase crop insurance: In the same way that car insurance provides the owner with a payment in case of a wreck, crop insurance provides payment in case of yield losses due to natural disasters or market fluctuations.