Some risks are out of our control, and as we know all too well, weather is a big one in the agricultural industry. However, there are some risks that are actually in our control.
Consider the risks that Boeing has dealt with this week.
With the crash of the Boeing 737 Max in Ethiopia, Boeing is experiencing what many businesses struggle to plan for, a major disruption to its business. The Boeing 737 MAX is one of the fastest-selling aircrafts in history. With increased fuel efficiency and passenger comforts, airlines around the world have flocked to include it in their fleets.
What looks like to be a software issue that impacts sensors and how the aircraft responds to pitch, tragedy has struck twice with hundreds of lives lost. Even though flying is the safest means of transport in the world, Boeing has the challenge of restoring passengers’ and airlines’ faith that the Boeing 737 Max is safe. Boeing now has to battle people’s perceptions, which is not easy to overcome.
Agriculture knows about unexpected events better that anyone.
Whether its an outbreak of E. coli or listeriosis or maybe an undercover animal rights video, agriculture has had to regularly respond to challenges that threaten people’s perceptions of our product.
But let’s get back to risk and unforeseen events. At the farm level, farmers and ranchers face variables that are large in number and threaten revenue and economic stability.
This week, TechTourLIVE stopped at Brandon, Regina, Red Deer, and Lethbridge. This last area knows that drought is a threat every year. The last three years have provided limited rainfall in-season which has dramatically impacted yields and has hurt profitability.
The Canadian cattle industry will never forget 2003. That was the year feedyards and ranches were faced with the first case of BSE in an old cow and the immediate closing of the Canada/U.S. border. The scars of 2003 are still real for many people. 16 years later we have not rebuilt our cow herd, people flinch when you talk about it, and many people never came back to the industry.
Planning for a major disruption to your farm business is not easy. Capital plans, types of insurance, drop-dead funds, or even exit strategies should all be on the table and up for consideration when talking about the “what ifs.”
Carve out the time to think about the business and financial risks that potentially could impact your business. Look beyond production risks, too.
Planning for the worst sometimes is the best way to ensure a better future.