Managing Agricultural Risks

Certain agricultural risks must be addressed for cultivators and small farms to stabilize income: human resources, legal, production, financial, and marketing risks. Different strategies and tools can be utilized to counter each of these risks.Cubicle to Cloud virtual business

Human Resource Management Risks

Risks in human resources are linked with people and relationships. The relationship can be of any kind. It can include family members, farm employees, and consumers. The primary sources of human resource risks come up for any reason, such as death, divorce, or disability.

Any of these proceedings can have a devastating impact on the small farm and its cultivators. Other human resource risks can involve harmful influences from poor communication and employee management skills.

What strategies can be used to manage human resource risks?

  1. Develop and implement good “people skills,” not just with your family members but also with your employees
  2. Assess other sources of labor
  3. Deliver adequate training to your employees
  4. Converse with your family members and employees
  5. Identify and give incentives for good performance
  6. Evaluate your powers of attorney, wills, and trusts
  7. Consider life insurance and health needs

Legal Risks

Legal risks refer to accomplishing and achieving business contracts and agreements. If you cannot meet these agreements, it will result in you paying a high cost for it. Another main foundation of legal risk relates to tort liability.

Furthermore, legal risks are also linked to environmental concerns and liability related to pesticide use, water quality, and erosion.

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What strategies can be used to manage legal risks?

  1. Evaluate insurance policies
  2. Carry adequate liability coverage
  3. Select a different legal structure for your business. The sole proprietorship is not always considered the best
  4. Comprehend business agreements and contracts. Wherever you feel the need, ask questions if unsure.
  5. Make good interactions with your neighbors and speak about their concerns
  6. Utilize suitable agricultural methods to restrict environmental risks
  7. Identify and follow all Federal and State regulations linked to your farming process

Production Risks

Production risk relates to the likelihood that your output levels or yields will be lesser than projected. The chief causes of production risks arise from hostile weather conditions such as excessive rainfall, drought, or freeze when harvesting or planting.

What strategies can be used to manage production risks?

  1. Track recommended production methods
  2. Expand enterprise by planting different varieties of crops and entirely new crops
  3. Increase production by implementing intensive growing practices
  4. Buy crop insurance coverage so that you can stabilize your income at times of loss

Financial Risks

Financial risks refer to not having enough cash to fulfill the expected obligations. You may generate lower profits than expected or lose the equity invested in the farm. Foundations of financial risk typically come from marketing and production risks. That’s why bookkeeping is encouraged: farmers can easily keep tabs on their financial position. 

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What strategies can be used to manage financial risks?

  1. Create a calculated business plan
  2. Keep tabs on your enterprise benchmarks and financial ratios
  3. Regulate key farm expenditures
  4. Follow a trend analysis so that you can assess changes in your farm’s owner’s equity and profits over time

Marketing Risks

Marketing risks are related to the likelihood of losing your market for your production items. It can also be that you receive the price for less than expected.

What strategies can be used to manage marketing risks?

  1. Create a marketing plan that is realistic in terms of target prices and sales forecasts
  2. Make or be a part of a marketing cooperative so that you can enhance your prices and assure your market


In conclusion, addressing agricultural risks is crucial for the stability and success of cultivators and small farms. Implementing diverse strategies is essential, from managing human resources and legal challenges to tackling production, financial, and marketing risks. Key steps include Developing people skills, understanding legal agreements, adopting sustainable production methods, and maintaining financial prudence. By navigating these risks strategically, cultivators can fortify their operations, ensuring resilience and prosperity in the dynamic agricultural landscape.

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