Canadian producers are thinking well beyond weather conditions, commodity prices and yields when it comes to weighing their risks, according to a recent Farm Credit Canada (FCC) survey.
While production-related risks – such as weather, pests and disease – are still very much top of mind in every sector of Canadian agriculture, producers are also keenly aware of risks related to marketing, financial and human resources (matters involving employees, partners and family).
“Modern farming involves so much more than making decisions around production,” said Craig Klemmer, FCC’s principal agricultural economist.
“It means keeping tabs on markets; ensuring your business can withstand sudden changes in commodity prices or economic conditions; and managing human resources while maintaining a safe work environment.”
The survey, conducted from July 11th-15th, showed a majority of farm operators reported a high level of concern for marketing (67 per cent of respondents), production (60 per cent) and financial (53 per cent) risks.
Human resources and legal risks were less of a concern at 31 per cent and 23 per cent, respectively.
Looking at risk through the lens of individual sectors, marketing risks were most prominent among beef and grains/oilseed sector producers at 74 per cent, followed by the fruit/vegetable/greenhouse sector at 58 per cent and the supply managed sectors of dairy and poultry at 55 per cent and 53 per cent, respectively.
Price and market access were among the top concerns.
Financial risk ranked highest among dairy, hog, cattle and other livestock producers, in the mid-50-per-cent range, and was slightly lower for the grains/oilseed and fruit/vegetable/greenhouse sectors. Financial risk was significantly less of a concern for poultry producers at 36 per cent.
Ensuring there is sufficient working capital was the most prominent financial concern across all sectors, followed by unfavourable changes in interest rates and meeting debt payment obligations.
Almost 65 per cent of the respondents identified insufficient working capital as a risk to their operation. Out of this group, about 45 per cent indicated relying on off-farm income to mitigate this financial risk.
Transitioning farm operations to the next generation was identified as a concern for 44 per cent of respondents, with about half of those respondents indicating they have a succession plan. Transition concerns were the most prominent among grains/oilseeds and dairy producers, while workplace safety was a common concern among all sectors.
The survey also explored a variety of production-related risks. Concerns about the weather were most prominent in grains/oilseeds and beef sectors, while concerns related to pests and disease were mostly on the minds of poultry producers.
“The good news is most producers are in a solid financial position to withstand short-term impacts on their business,” Klemmer said. “We encourage producers to have a risk management plan that pulls together mitigation strategies, as well as identifies key risks and available solutions to manage these risks before they emerge.”
The survey involved 1,363 producers considered key decision makers for their operations. Based on the sample size, the survey has a margin of error plus/minus 2.2 per cent, 19 times out of 20.
By sharing agriculture survey results, FCC provides solid insights and expertise to help those in the business of agriculture achieve their goals. For more information and insights on Canadian agriculture, visit the FCC Ag Economics blog post at fcc.ca/AgEconomics. To learn more about the FCC Vision Panel, visit www.fccvision.ca.