Risk, defined most simply as the possibility of suffering harm or loss, is part of everyday life, and risk is certainly a part of Christmas tree production. While most Christmas tree growers believe the business to be relatively risky, many growers lack a complete understanding of risk and risk management principles. As a first step toward successfully managing risk, growers must understand risk.
RMA’s stated mission is to “Promote, support, and regulate sound risk management solutions to preserve and strengthen the economic stability of America’s agricultural producers.” In addition to providing formal risk management programs such as crop insurance, RMA sponsors Risk Management Education Programs to help growers become more capable risk managers.
Risk Overview
The content provided on this website was selected to introduce key risk and risk management concepts that are vital for succeeding in Christmas tree production. As an introduction to risk and risk management, we provide an excellent RMA fact sheet entitled "Risk and Risk Management." The four-page document outlines the fundamental principals of risk and risk management, including an explanation of three guiding risk management rules:
•Don't Risk a Lot for a Little;
•Don't Risk More than You Can Afford to Lose;
•Know the Odds.
Whether you are new to agricultural risk management or just want to brush up on the basics of risk and risk management, this article is a great starting point.
Five Categories of Risk
Beyond basic risk and risk management principles, the content includes introductions to RMA’s five commonly recognized categories of agricultural risk: production risk, marketing risk, financial risk, human resource risk, and legal risk. An understanding of these risk categories is fundamental for growers seeking to successfully manage risk. As a starting point for understanding the five risk categories, from the National Crop Insurance Services’ (NCIS) Crop Insurance and Risk Management Primer [1], we provide a three-page article by Dr. Laurence M. Crane entitled Risk Overview.
Strategic Risk Management and Federal Risk Management Programs
While agricultural risks can be categorized and considered independently, effective risk management requires decisions that stretch across the five risk categories. We therefore include a discussion of strategic risk management practices and the role of Federal risk management programs in effective risk management. We also provide practical risk management tools as we seek to make the content applicable to individual growers and their unique operations.
Additional Resources
The National Ag Risk Education Library and four regional risk management education libraries are funded by the USDA to improve growers’ access to risk management education content and tools. Each library has an extensive online collection and excellent search capabilities.
• National Ag Risk Education Library at the University of Minnesota:
http://www.agrisk.umn.edu/;
• Northeast Center for Risk Management Education at the University of
Delaware:
http://www.necrme.org/;
• Western Center for Risk Management Education at Washington State
University:
http://westrme.wsu.edu/;
• North Central Risk Management Education Center at the University of
Illinois:
http://www.farmdoc.uiuc.edu/ncrisk;
• Southern Region Risk Management Education Center at Texas A&M:
http://srrme.tamu.edu/.
In addition, we recommend the following introductory papers:
• Risk and Resilience in Agriculture - An Introduction to Risk in Agriculture:
http://agecon.uwyo.edu/RnRinAg/Default.htm
• An Introduction to Risk and Risk Management:
http://www.rma.usda.gov/pubs/1997/riskmgmt.pdf.
[1] We recommend NCIS’ Crop Insurance and Risk Management Primer as a comprehensive introduction to Agricultural Risk Management and Federal Risk Management Programs. Selected sections of the Primer document are included as recommended reading for many of the topical areas, and the entire primer is provided on the enclosed compact disk (CD).
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