Risk Management

What is the Difference Between LRP and LGM Cattle Insurance?

Thu, 23 Apr 2026 18:10:24 GMT

With cash outlays for feeder cattle and replacement females at record highs, Livestock Risk Protection (LRP) and Livestock Gross Margin (LGM) have become essential tools for managing financial risk. Recent USDA updates have made these subsidized programs more accessible, now allowing producers to insure unborn calves and set price floors for multiple stages of production. According to Iowa State University’s Patrick Wall, these tools are designed to protect equity without limiting the upside of a strengthening market.

“Cash outlay for feeders, replacement heifer calves, yearlings, bred heifers and bred cows is certainly higher than ever in all sectors,” says Wall, ISU Extension and outreach beef specialist, in a recent Growing Beef Newsletter article. “No doubt, two important programs supporting the market are Livestock Risk Protection and Livestock Gross Margin. Recent updates have made these programs more attractive and less expensive to a much wider audience in the supply chain.”

Can You Insure Unborn Calves with LRP?

According to Wall, unborn calves can now be insured for a future sale date.

“This program can be utilized for both purchased bred females just arriving on farm as well as pregnant heifers and cows that have been part of the operation already,” he says. “The premium is subsidized by the government, much like traditional crop insurance.”

He shares these options:

If a producer has 100 cows to calve in April to May they can insure 95 unborn calves up to 599 lb. at weaning.
If a producer bought a group of bred heifers, they can insure their upcoming progeny to protect their initial investment.
“LRP does not insure the viability, health, weight or gavel price for any of those calves,” Wall explains. “You still have to manage them to the best of your ability. It does insure the futures price for feeder cattle will be at least what you insure it to be, on the date you specify. If the price actually goes up, there’s no penalty or premium increase; simply put those extra dollars in your pocket on sale day.”
If a producer wants to hold on to them post-weaning for another 90 days, they can insure them again for a future sale date.
If a producer wants to market some on-farm feed through the cattle by feeding them clear to finish, the producer can insure them a third time clear to market weight. “You’re setting the floor for the futures market,” he says. “The top side is still open should the market strengthen further during the feeding period.”

What is LGM?

“For the feedlot sector, margins matter,” Wall explains. “This program insures both the revenue side — fed cattle price — and the cost side — feeder cattle price and corn price — of a transaction, working in tandem.”

While the feed necessary to finish a given set of calves may already be purchased, its value can change. Likewise, futures markets on both fed and feeder cattle can be quite volatile.

“In some cases, all three segments of LGM can react negatively to each other,” Wall says. “This program insures that doesn’t happen for you, with a subsidized premium as well.”

Wall recently interviewed Tony Latcham of Stockguard Risk Management for the “Iowa Beef Collective” podcast . The episode summarizes both LRPs and LGMs and how to effectively use them, regardless of the size and scope of your operation.

From Tweets to Limits: AI Is Rewriting Cattle Market Volatility

Tue, 21 Apr 2026 19:21:55 GMT

A stray comment about disease or a headline on social media can now send cattle futures limit-down — without a single human trader touching a button. That’s the new reality Pat Shields describes as he contrasts the $1.50 daily moves of his college days with recent $5 to $6 ranges in feeder contracts.

He explains, behind the scenes, artificial intelligence (AI) and automated systems scan for keywords, trigger trades and expand volatility. For producers, the takeaway is sobering — old rules of thumb about “normal” moves no longer apply, making structured risk management more important than ever.

Shields, Capital Farm Credit senior relationship manager, and Landon Nelson, Farm Credit Services of America commercial insurance services officer, discussed cattle market risk during a Cattle Chat session at CattleCon.

Risk management has long been associated with big feedyards and full-load futures contracts, leaving many smaller producers on the sidelines. According to Shields and Nelson, that’s changing fast.

Livestock Risk Protection (LRP), which allows producers to insure cattle by the head, is gaining traction with cow-calf and mid-sized operations looking for a realistic way to set price floors. They explain LRP is a practical entry point for producers who may not trade futures but still need to protect the equity they’ve built in a historically strong market.

For many cattlemen, the most profitable strategy in the last year was simply to stay wide open and ride the market up — a fact that makes it tempting to dismiss risk management as “money left on the table.”

Yet, as the panelists point out, LRP has quietly helped smaller operators sleep better, even when it didn’t pay out. By giving producers a guaranteed floor on 30, 40 or 100 head at a time, LRP provides a way to manage price risk without over-hedging or taking on more contracts than cattle in the yard.

Here are the eight key takeaways from Shields and Nelson’s risk management discussion:

1. Production and Risk Management are Two Different Games

Shields suggests producers treat raising cattle and managing price risk as separate “buckets.” A loss in futures doesn’t mean you lost overall if your cattle are properly hedged.

“A lot of people are really wanting to make money in the market, but the market moves different from your cattle, if you’re truly hedged,” he explains. “So you need to make that decision if you’re going to be a hedger, you hedge that thing, and then if you have to make a margin call, that’s all right, because you’re offsetting cattle you have that are making you money at technically the same rate, but you’re just out some interest on the margin calls, and we’re there for protection.”

He adds, “Keep the mindset of I want to produce this thing. I want to sell this thing, grow it as big as I can, make as much money off of it. But as I’m doing my risk management, they’re two different pockets. It’s not a loss in the futures market. It’s that you had your cattle hedged until you got them marketed or laid off.”

Practical takeaway: Raising cattle and trading or hedging should be viewed as two separate pockets, not one profit or loss. A loss in the futures market isn’t necessarily a loss overall if your cattle are properly hedged — the cattle are gaining value while you’re paying margin calls.

2. You Don’t Need to “Hit the Top” – You Need a Plan

The speakers warned against chasing “price perfection”— trying to call the exact top or bottom. For a small cow-calf producer, the priority is staying durable over time, not bragging about catching the best price one year.
Nelson encouraged producers to ask themselves:

Do we only react when prices move?
Or do we follow a repeatable risk management plan every year?

Practical takeaway: Even a simple, written rule like “we protect X% of expected calves at Y time each year” is better than deciding based on emotion every week.

3. Protect a Portion of Your Production, Not Necessarily All of It

Nelson suggests the idea of protecting a percentage of production, rather than all-or-nothing bets. Even in a bullish market, he says having 30% to 40% of cattle price-protected can give producers a financial “floor” while still leaving upside open.

Practical takeaway: As a small cow-calf producer, you might decide, for example: “We’ll put some form of price protection on one-third of our expected calf crop each year.”
This helps protect your cash flow and equity without having to perfectly time the market.

4. Match Your Risk Tools to Your Size and Reality

Protect a sensible percentage of production, match hedges to actual cattle owned and work with lenders to understand how much price drop your working capital can withstand. Shields emphasizes producers should match their price protection to their actual operation.

“You need to know what your plan is, what your operation is and match your price protection to what you’re actually doing in real life,” he says. “Otherwise, if you’re doing things like that, why own one? Just trade the paper and pretend to be smart and you can brag about that at the coffee shop instead of how much your cattle are losing.”

He gave the example of a producer who owned 1,000 head but was short 2,000 in futures —effectively he double-hedged, turning strong cattle profits into losses.

Practical takeaway for small cow-calf: Consider tools that work by the head or in small lots like LRPs or per-head-style coverage instead of big futures positions a producer can’t comfortably match with actual cattle.

Shields stresses producers always need to know:

How many head they actually have at risk.
What volume they have protected — and that it lines up.

5. Boring and Consistent Beats Emotional and Exhausting

Nelson describes how emotional decision-making — contemplating “should we hedge today” every day — wears producers out.

“If you manage your expectation for what you’re asking risk management to do for your operation, and take the emotion out of that, then if you put a plan behind that, risk management can stop feeling like such an exhaustion point,” Nelson explains.

A simple, rule-based plan reduces stress and second-guessing.

“Some of the strongest operators that I see are less focused on capturing the perfect price and instead they’re focused on durability in their business, over price perfection,” Nelson adds.

Practical takeaway: As a small producer, pick a few clear rules and follow them. When prices reach a profitable level relative to known costs, protect a portion. Don’t abandon the plan just because the market keeps going up after you locked in some floor.

“Facts and data aren’t frustrating,” Shields adds. “Emotion is what frustrates you, and that’s what causes you to make silly decisions sometimes and to react too quickly.”

6. Don’t Let High Prices Lull You Into Complacency

The last few years have rewarded simply holding cattle — equity has gone up for many. But margins are starting to tighten and volatility is increasing.

Both Nelson and Shields agree just because being “wide open” worked recently doesn’t mean it will continue to work.

Practical takeaway: If you’ve built equity in your herd, start thinking about how to protect it. Small cow-calf producers often have most of their net worth in land and cows — losing one or two years’ calf checks to a big market reversal can be very damaging.

7. Modern Volatility Means Bigger, Faster Moves

Nelson notes that daily price ranges are much bigger than in the past. AI and algorithmic trading can react to a tweet, a news blurb or a rumor and move the market limit-down or limit-up without human traders pushing the buttons.

Old ideas of “normal” movement no longer fully apply.

Practical takeaway: Don’t assume “it can’t move that much that fast.” It can. Having some price protection in place when you have calves at risk is more important in this environment, especially if a bad year would really hurt your family operation.

8. Start With Simple Questions at Home

The duo encourages small cow-calf producers to consider these questions with their family or team:

What is our goal? This can include equity preserved, cash flow stable or growth.
What outcome will we be content with from this hedge/insurance?
How much can we stand to lose before our equity meaningfully erodes?
What portion of our herd or production should always be protected?
Are we making decisions from data and targets, or from fear and greed?

Nelson and Shields’ message to cattle producers is less about predicting the next market high and more about building businesses that can withstand whatever comes next. After several years in which simply owning cattle created unprecedented equity, they argue the real work now is protecting that wealth with risk strategies that match each operation’s size, goals and tolerance for volatility.

Whether it’s using LRPs by the head, protecting a consistent percentage of production, or assembling a team that includes the banker, accountant and family, their advice was clear: trade the chase for “price perfection” for a simple, repeatable plan that keeps you in business — year after year.

Your Next Reads:

Why Livestock Risk Protection is a Critical Consideration in 2026

Fri, 20 Feb 2026 14:16:49 GMT

While cattle prices remain historically high, the 2025 market proved volatility can quickly erode margins.

“Given that the cattle cycle is set for a slow rebuilding phase, there is a reasonable expectation that the market will remain supported for the next few years,” says James Mitchell, University of Arkansas agricultural economist in the Cattle Market Notes Weekly. “But as fall 2025 showed us, cattle markets are not immune to volatility.”

Livestock Risk Protection (LRP) and option premiums are not cheap because cattle prices are high, Mitchell explains.

“This reality has led some to question whether price risk management is worth it at today’s price levels,” he says.

Case Study: The Value of LRP in Fall 2025

To demonstrate the impact of price risk management, Mitchell shares this real-world scenario from Arkansas in late August 2025:

The Setup: A producer planned to sell 550 lb. steers in November

The Policy: Purchased LRP at a $394/cwt. coverage price (100% level)
The Cost: $12/cwt. premium
The Market Shift: By Nov. 24, the actual ending value dropped to $365/cwt.

The Result:

Indemnity Triggered: $29/cwt.
Net Return: $17/cwt. (after premium)
Per Head Value: $94/head added value
Total Per Load: ~$8,500 in protection

Without LRP, the cash price for a 550 lb. steer was $378/cwt. for the week ending Nov. 21. With LRP, the realized price rose to $395/cwt.

Fall 2025 was a reminder of how sensitive the cattle market is to news and surprises. A look at the November 2025 Feeder Cattle futures contract and weekly cash prices (see below) in Arkansas highlight just how quickly prices can move.

(Cattle Market Notes Weekly)

Mitchell admits the example in this article perfectly times the purchase of LRP with the fall 2025 downturn in cattle prices.

“Buying LRP earlier last year would not have triggered an indemnity because the market rallied leading up to the fall,” he says.

Why 2026 Price Risk is Different

While the cattle cycle suggests a slow rebuilding phase with supported prices, structural risks remain. Mitchell explains how the math of risk has shifted:

More Dollars at Risk: A $20/cwt. drop is the same percentage loss regardless of the market, but at today’s record prices, the total dollar loss per operation is significantly higher.
Limited Flexibility: With high interest rates and debt obligations from herd expansion, many producers cannot afford to absorb a $30/cwt. swing.
Volatility is the New Normal: Market shocks from policy changes, trade shifts or weather events happen faster than in previous cycles.

Takeaway for Producers

“LRP is not about increasing the odds of an indemnity payment or maximizing profit,” Mitchell says. “It establishes a price floor and reduces downside risk.”

LRP is not designed to beat the market or guarantee a profit every year. Its primary function is to establish a price floor. Using LRP to cover your breakeven point or secure a target return is a more sustainable strategy than attempting to time market peaks.

Navigate Market Volatility with Risk Management Strategies

Wed, 22 Oct 2025 18:57:53 GMT

According to Farm Journal’s 2025 State of the Beef survey, risk management tools are being implemented by nearly half of producers. With 43% using Pasture, Rangeland, Forage Insurance (PRF) and 40% using Livestock Risk Protection (LRP) insurance.

Contract-based methods — such as futures, options and forward contracts — remain far less common. The survey shows producers are more likely to use risk tools that are simpler and more accessible, such as insurance, income diversification and off-farm income, instead of the more complex market-based tools.

Dave Weaber, Terrain senior animal protein analyst, says: “Risk management is crucial for producers, including developing comprehensive business plans, understanding cost structures, and using tools like LRP, futures and options.”

He says risk management for beef producers is far more than just a financial strategy — it’s a holistic approach to business sustainability.
Risk management is about protecting equity while maintaining operational flexibility. Weaber challenges producers to think beyond traditional commodity approaches, focusing on strategic decision-making that preserves long-term profitability.

“Set aside $40 to $70 a head for risk management,” he says. “I don’t care how you do it, if you use LRP futures, options [or a] combination of it — whatever it is.”

Weaber challenges producers to rethink their approach, asking the critical question: “How do I get less long? Every cattle producer is long in the market. How does he get less long and leave opportunity for the upside?”

He summarizes risk management isn’t about eliminating all risk but strategically navigating market uncertainties.

He encourages producers to:

Remain adaptable
Continuously educate themselves
Invest in measurement and management tools
Prepare for potential market shifts

By adopting a comprehensive, forward-thinking approach to risk management, beef producers can build more resilient, profitable operations that can navigate market challenges while maintaining financial health.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. You can download the full report here.

For more insights to the report, as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Ken Odde along with Matt Perrier, an Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

Your Next Read: 15 Insights on the State of the Beef Industry

Protecting Your Profits With Price Insurance

Wed, 04 Jun 2025 18:09:27 GMT

With the value of cattle continuing to rise, the amount of risk tied up in each animal in the pasture and the feedlot also increases. Risk management tools are available to producers to help mitigate the effects of the cattle cycle and volatility in the market.

Cash cattle prices have risen for the last seven weeks. The spread between futures and cash is really wide with multiple issues affecting the spread.

Fifth generation rancher, Jared Brackett, Filer, Idaho, runs a cow-calf and backgrounding operation with his family. Brackett began purchasing Livestock Risk Protection (LRP) on his cattle four years ago as it was cheaper and easier than using futures and options for hedging.

“I tell people we’re not trying to find the top of the market with price insurance, we’re trying to protect what you have,” Brackett says. “You don’t buy fire insurance for your house when it’s on fire. You buy it before, hoping you never have to use it. It’s the same concept with price insurance. You buy it hoping you have to pay your premium because then all your cattle are worth more.”

LRP is a government program subsidized through the Risk Management Agency. Brackett, who became licensed to sell LRP after using it and finding the benefits of it, explain it’s the same thing as using options, but costs 30% less and producers don’t have to set up a hedge account.

I pay a lot of money in premiums every year. But what it does is it gives me that peace of mind that if things fall apart, it’s not going to break me.

Jared Brackett, fifth generation rancher

“It’s a very simple, easy program. It is true insurance,” he says. “The part that people have a hard time getting their arms wrapped around is the government doesn’t care what you sell your cattle for. All they care about is the day you buy your contract, what the futures price is that day, and what the futures price is the day your contract ends. That’s the part that gets people; they don’t understand that.”

What you need to know about LRP

There is a fed cattle option, which is anything more than 1,000 lb. and based off live cattle futures. The settlement price is based off the six-state average that USDA publishes. Producers have to show proof of ownership of cattle through purchase receipts, livestock vaccine receipts or a veterinarian certifying ownership.

“It’s not exactly a one-to-one like futures are for feeder cattle, but it’s still a good tool to protect your enterprise,” Brackett says. “You have to have sold your fat cattle they have to be dead within two months of your contract, either before or after.”

There are four options for feeder cattle including steers and heifers under 600 lb. and steers and heifers more than 600 lb. There are also options for unborn steers and heifers. Contracts are put on after hours.

“After the market closes, agents will get a report with the prices for the different contracts,” Brackett says. “Those prices are good until the next morning before the market opens. They quit taking contracts because the government has to turn around and buy these positions in the market to offset what you’re buying from them.”

Brackett recommends filling out an application early and working with a licensed crop insurance agent who understands LRP.

“Don’t expect to sign up and trade the same day because it gets hectic, and there is no guarantee you can get it done in a day,” he says.

Whether you are an LLC, partnership or sole proprietor, the application will need to show who is part of it and what percentage of ownership they have.

“Once USDA approves the application, you qualify for the 30% subsidized price through the risk management arm of USDA, so it’s going to save you money, and it is true insurance to protect you in case something happens,” Brackett says.

LRP can be purchased on a per-head basis offering options for producers of all sizes.

“You’re not required to do 50,000 lb. loads like you do with regular, traditional hedging in the futures market for options, so it lets people with smaller lots of cattle do it along with people who have 10,000 head of cattle or more use it,” Brackett says.

Another advantage of price insurance is for producers selling on video auctions.

“They can put price insurance on their cattle in January, sell their calves in July, and that’s when their price risk ends on their calves,” he explains. “If you’re not selling on those markets, you have to do your contract in December, not July, so it costs more. It’s a great tool because it allows them to take that price risk out. And you can purchase this stuff before your calves are born.”

As a cattle producer, Brackett says using price insurance as a risk management tool is important for him to protect his investment, and he encourages others to learn more about their options.

“It’s there in case something happens like screwworm comes into the United States and collapses our cattle market,” Brackett says. “Calves are worth on average over two grand, and it’s going to cost 3% to protect that value. That’s 60 bucks to protect two grand, and if something stupid happens, they’re worth 1,200 bucks. It’s a no brainer for me, and it’s a no brainer for a lot of financial institutions. They love it because it guarantees their customers are going to make a profit. You don’t have to worry about the market falling apart on you.”

Your next read: A Repeating Cycle: Sell Off, Recovery and Volatility in the Livestock Markets

Timing Mismatch: Analyzing the Upside and Downside Risk in PRF Policy Selection

Mon, 19 May 2025 21:01:01 GMT

A unique risk with Pasture, Rangeland, and Forage (PRF) insurance is that rainfall during a particular two-month interval does not necessarily lead to forage growth during that interval. Rainfall is obviously crucial for forage production, but the impact of precipitation on forage is not instantaneous. Often, rain that occurs during one interval will contribute to forage growth in the following months more than the month in which the rain occurred. Therefore, choosing a PRF interval that aligns directly with your critical forage production interval could potentially be a mismatch.

A downside of this timing mismatch is that a producer might not receive an indemnity payment when needed. For instance, if the insured interval experiences average rainfall but the interval prior had low precipitation or the rain came toward the end of an interval, the forage growth might still be insufficient. Unfortunately, because the payment is based strictly on the rainfall during the insured interval, producers might not receive any payout despite facing significant challenges. The chance of this outcome occurring is considered a false negative probability (FNP). False in the sense that the signal (rainfall) did not correspond with the underlying production need (forage production), and negative in that the outcome provided no protection when you needed it.

On the flip side, this same mismatch can work in favor of producers. Suppose the insured interval experiences low rainfall, but the previous interval had good precipitation. In that case, sufficient forage growth can occur in the insured interval, and the insured can still receive an indemnity payment. The likelihood of the PRF policy providing a payment even when forage conditions are favorable is the false positive probability (FPP).

Figure 1: False Negative Probability Percentages in Arkansas Grids for the June-July Interval (1981-2023). Note: These values were calculated using an assumed 90% coverage level.

(University of Arkansas)

Figure 1 above illustrates this potential downside risk through the prevalence of FNPs in grids in Arkansas. These values were calculated by creating a forage/vegetation index to match the rainfall index used by the PRF program. Using normalized difference vegetation index (NDVI) values, we found the FNP percentages for each grid and each interval. Figure 1 highlights the June-July interval, telling us the percent chance that the forage/vegetation index would indicate a need for an indemnity based on the coverage level when the policy using the rainfall index has not been triggered (Keller & Saitone, 2022). This shows the prevalence of this issue and that producers in certain regions should be more wary of this type of risk.

Inversely, Figure 2 below presents the frequency of FPPs showing the upside risk. Reversing the methodology, these were calculated as the percent chance that the rainfall index indicates an indemnity should be issued based on the coverage level when the forage/vegetation index says an indemnity should not be issued. This scenario tends to be more prevalent, which is good for the policyholder. Certain grids exhibiting high FPPs also tend to show high FNPs, indicating they might frequently receive unwarranted payments while simultaneously facing situations where they do not receive payments when needed. This raises an issue with the producer, causing them to change how they manage their finances to protect themselves instead of the program doing so properly.

Figure 2: False Positive Probability Percentages in Arkansas Grids for the June-July Interval (1981-2023). Note: These values were calculated using an assumed 90% coverage level.

(University of Arkansas)

While these figures only highlight the prevalence of FNP and FPP in Arkansas, these risks are inherent in PRF and are just as likely in the other southern states. To counter this risk, producers should consider not only the months when forage is most needed but also the months when moisture and precipitation are most important. Using this information, they can choose their PRF intervals appropriately and reduce the risks involved in the program.

Davis, Walker B., Lawson Connor, and Hunter Biram. “ Analyzing the Upside and Downside Risk in PRF Policy Selection: Timing Mismatch. ” Southern Ag Today 5(21.1). May 19, 2025.

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30 Minutes With Secretary of Agriculture Brooke Rollins In Her First Week On the Job

Wed, 19 Feb 2025 21:14:00 GMT

Since Saturday, Nov. 23, 2024 , Brooke Rollins has been focused on how to build the teams and the plans that impact the trajectory of agriculture and rural America. On that day, while en route with her husband and four teenagers in their motor home to Auburn, Ala., for the Texas A&M football game, she got a call from now President Donald Trump. The purpose of his call: She was his top choice to fill his final significant cabinet position, Secretary of Agriculture.

Obviously, she had to wait for confirmation, which came last week on Feb.13 when the Senate overwhelmingly confirmed her as the 33^rd Secretary of Agriculture , but since that Saturday before Thanksgiving, she’s been on the go with an accelerated enthusiasm to understand the significant challenges facing rural communities that lost 147,000 family farms between 2017 and 2022 and why the cost of inputs are up 30% as exports are down $37 billion this year and likely to fall further in the months to come.

“This is a crisis, and this is something that I understand inherently,” Rollins said to kick off Top Producer Summit in Kansas City on Tuesday. “My promise to you is this, and my commitment will never waver, that every minute of every day for the next four years I will do everything within my power, with hopefully God’s hand on all of us and our work, to ensure we are not just entering the golden age for America, as my boss, President Trump, likes to say, but we are entering the golden age for agriculture.”

What Has Rollins Been Up to the Past Four Years?
Secretary Rollins and President Trump have worked together for almost eight years. She was in the West Wing with him for years two, three and four of his first term running his domestic policy agenda.

“This real estate guy from New York City brought that vision to life, and then in the last term, was able to really do some remarkable things,” Rollins said in regard to President Trump returning power to the people who just want a chance at the American dream. “I call it the great pause, the four years in between term one and term two. But I think the great pause allowed very intentional planning. It allowed a courageous and bold leader in President Trump to become a fearless leader and to do everything he can to bring America back to greatness.”

In the “dark days of January 2021,” as she described, Secretary Rollins helped launch the America First Policy Institute, a think tank established by former Trump officials to promote conservative policies. The idea was that those policies that made America great in Trump’s first term would continue indefinitely, not just for a second term, but for four years, eight years or 36 years, Rollins described.

First Week On the Job
Since being confirmed last week, Secretary Rollins has been in the Washington, D.C., USDA office for a few hours, but most of her time has been spent in Kentucky at National Farm Machinery Show in Louisville and Gallrein Farms and in Kansas visiting Finney’s County Feeder, High Plains Ponderosa Dairy and the National Beef Packing Plant .

Describing herself as “a reader and a studier,” Rollins seems adamant to hear firsthand from farmers and ranchers. She referenced her visits to the dairy farm and National Beef facility as inspiring, in a good way but also in a way that helps her understand the real challenges at hand.

Speaking to the crowd at Top Producer Summit, she shared her appreciation for the “entrepreneurial American game changers” who are doing their part to feed the world.

“It is so inspiring and a reminder of the very beginning of our country.” Rollins said. “Our revolution was fought by farmers, our Founding Fathers, like Thomas Jefferson and George Washington. The backbone of the great American experiment is this community.”

Thank you @topproducermag for hosting @RogerMarshallMD and me in Kansas City, Missouri, with 1,000 of the Top Producers from across the US to talk about issues like expanding trade access and cutting regulatory red tape for farmers.

Biden’s ZERO trade deals and inflationary… pic.twitter.com/ejMxKxkRMG
— Secretary Brooke Rollins (@SecRollins) February 19, 2025

Farmer Q&A
Watch and listen to what Secretary Rollins, as well as Sen. Roger Marshall of Kansas, had to say on stage at Top Producer Summit about these 7 topics:

Trade and tariffs — “ Let’s go barnstorm the world , and let’s go find some more trade partners and access [to market opportunities],” Rollins said.
Department of Government Efficiency (DOGE) efforts and modernizing USDA — “DOGE is a very valid and important effort across all government. The stories of waste and abuse were really just, not USDA specific but across government, beginning,” Rollins said.
Federal programs, such as CSP and EQIP — “Our commitment is that if there have been commitments made, those will be honored. Getting our arms around all of that right now is really, really, important. Again, going back to the President’s heart and commitment to our farmers, I feel confident we will be able to solve any issues that are in front of our ag community, that are potentially being compromised by the DOGE effort, while at the same time recognizing how very, very important it is,” Rollins said.
Future of USDA — “There’s no question USDA needs some modernization. I’m just beginning to lean into that as well,” Rollins said. USDA has 106,000 employees and 29 departments. “The Secretary is taking over a department where only 6% of the [D.C.] people work in the office,” Marshall added.
Renewable fuels — Prior to President Trump’s first term, he was “the first major candidate to support biofuels, and I think that carried him through Iowa in many ways. … We’ve got E15 year-round. I think that gives us some certainty as well. … The President is supporting that. I think we’re trying to figure out how to save 45Z, but we can’t let China benefit from it. Right now, China is benefiting more from [45Z] than my farmers and ranchers are, so we’ve got to fix that,” Marshall says.
Immigration policies and availability of long-term labor — “I have a full-bodied understanding of the challenges within the labor market, and I believe the President does too. … I believe that we will very soon be talking about it again. Clearly, the H-2A program needs significant reform, and Lori Chavez-DeRemer, she’s going through the [confirmation] process right now. … Hopefully she’ll get her vote very soon. We’ve got a lot of work to do,” Rollins said.
Trump’s cabinet members — “Our cabinet is comprised of people that have been working together and have been friends and colleagues for years, with a few exceptions. Bobby Kennedy is a new friend, but Lee Zeldin and I worked together in America First Works and America First Policy Institute for the last almost four years, Linda McMahon in education and John Brooks — these are our people,” Rollins said.

BREAKING: USDA Secretary Brooke Rollins and Sen. Roger Marshall to Join Farmers At Top Producer Summit

Sun, 16 Feb 2025 21:24:22 GMT

Secretary of Agriculture Brooke Rollins and Sen. Roger Marshall of Kansas will speak Tuesday morning at this week’s Top Producer Summit in Kansas City. The event is among the secretary’s first public appearances since being confirmed Feb. 13 . The fireside chat will cover key topics driving the future of agriculture.

A one-day pass to the event is available to give the agriculture industry a chance to hear Secretary Rollins share her vision for U.S. agriculture. Advanced registration is required due to security protocols. Register now with discount code ONEDAY to receive the special rate.

Secretary Rollins, originally from Glen Rose, Texas, serves as the 33rd Secretary of Agriculture. Most recently, she was founder, president and CEO of the America First Policy Institute. During President Donald Trump’s first administration, she was the director of the Domestic Policy Council and assistant to the President for Strategic Initiatives in the White House. She also previously served as director of the Office of American Innovation.

Sen. Marshall is a physician and U.S. Senator for Kansas. As a fifth-generation farmer from Butler County, Sen. Marshall became the first in his family to attend college. In the Senate, he serves on the Committee on Agriculture, Nutrition, and Forestry. He is the chairman of the Subcommittee on Conservation, Climate, Forestry, and Natural Resources and a member of the Subcommittee on Food and Nutrition, Specialty Crops, Organics, and Research.

Tickets are still available to attend the entire Top Producer Summit , which is agriculture’s premier educational and networking event for forward-thinking farmers and ranchers. The event will bring producers of nearly a dozen commodities together at the Loews Kansas City Hotel to share business opportunities and ideas for taking their operations to the next level.

In addition to the fireside chat with Secretary Rollins and Sen. Marshall, the agenda includes:

The Future of Farming with Byron Reese, futurist, technologist and entrepreneur
Conquer Decision Paralysis with Rena Striegel, Transition Point Business Advisors
How Income Taxes May Change Due To The Election with CPA Paul Neiffer
Land Diversification: What to Know Before Exploring Renewable Energy and Conservation Opportunities with Quint Shambaugh, Pinion
What’s Ahead for Farm Input Pricing with Sam Taylor, Rabo AgriFinance
What to Watch With the Weather in 2025 with Eric Snodgrass, Principal Atmospheric Scientist, Conduit Ag
Global Fertilizer Market Overview: What It Means At Your Farm Gate with Josh Linville, StoneX

Some of the nation’s most outstanding farm operations will be recognized, including winners of the 2025 Top Producer of the Year award , the 2025 Women in Ag award and the 2025 Next Gen award .

UNL Offers Upcoming Educational Opportunities for Beef Producers

Fri, 10 Jan 2025 21:58:38 GMT

The University of Nebraska — Lincoln and Nebraska Extension is offering educational opportunities to support Nebraska’s beef industry through production challenges.

Webinar: Drylot Feeding Cow-calf Pairs
Monday, Jan. 13, Online

Should drought conditions continue and intensify this spring, drylot feeding of cow calf pairs may be an option to consider for retaining a portion of the cow herd. Considering the logistics and costs of drylotting pairs now will help producers to know their options and prepare and purchase feed.

Forage Production and Quality Clinic
Wednesday, Jan. 15, Arthur

Join researchers from the West Central Research, Extension and Education Center and local ranchers to discuss recent forage production experiments in North Central Nebraska.

2025 Three-State Beef Conference
Thursday, Jan. 16, Lincoln

The Three-State Beef Conference is designed to give beef cattle producers and others in the beef industry a regular update on current cow-calf and stocker topics. The conference provides a forum of specialists from three of the United States’ leading beef cattle land grant universities as well as other industry experts. Additional dates for this conference, with the same speakers and agenda, are Tuesday, Jan. 14 in Maryville, Mo., and Wednesday, Jan. 15 in Greenfield, Iowa.

Livestock Risk Management Workshop
Monday, Jan. 21, Clay Center

Nebraska Extension educators and specialists will highlight strategies designed to reduce risk exposure so livestock producers can achieve a profitability outcome in uncertain times.

Webinar Series: Fundamentals of Feeding the Cow
Starting Monday, Jan. 27, Online

This four-session webinar series is focused on understanding how the cow’s nutrient requirements change throughout the year and how to cost-effectively meet a cow’s needs with grazed or harvested feed.

Webinar Series: Calculating Annual Cow Costs
Starting Monday, Jan. 27, Online

Knowing annual cow costs is the foundation for evaluating and making management decisions that can improve profitability for a cow-calf enterprise. Input costs are challenging producers to examine the cost of production and identify where there may be opportunities to adjust the production system.

UNL Winter Stocker Tour to feature Darr Feedlot
Wednesday, Jan. 29, Lexington

Nebraska Extension’s annual summer Stocker/Yearling Tour has been a successful educational program for stocker/yearling operators and beginning producers across Nebraska. Previous attendees and advisory board members have expressed interest in a winter stocker tour to gain insight on cost-effective options to background calves through the winter.

Manure/Land Application Training
February & March, Several Locations

Anyone with an interest in manure management is welcome to attend.

Beef Feedlot Roundtables
Feb. 18, 19, 20, Bridgeport, Gothenburg, West Point

Highlights from the program include managing hairy heel wart in the feedyard, leveraging cattle implant strategies for greater gains, UNL research update, and a market outlook with speakers from Nebraska Extension and Nebraska Cattlemen.

Nebraska Women in Agriculture Conference
Starting Thursday, Feb. 20, Kearney

Participants will select from over 20 workshop options that cover the five areas of agricultural risk management: production, market, financial, human and legal.

Midwest FEEDS Practicum
Starting Thursday, Feb. 27, Ithaca

Learn practical, research-based strategies to improve your operation’s efficiency and profitability while leveraging the Midwest’s unique advantages in forage and grazing resources.

Find out more about any of these events at beef.unl.edu/events , or by following UNL Beef on Facebook, Twitter, Instagram and LinkedIn.

Your next read: When to Assist with the Calving Process – the Three Stages of Parturition

Recognizing Economic Risk on the Ranch

Mon, 21 Oct 2024 20:20:30 GMT

One of the primary overarching economic risks that many cattle ranchers face without realizing it, is that the economic production model that is currently in place for their operation will not consistently be profitable over the long term.

It may be that since the ranch was put together the competitive advantage or circumstances that facilitated profitability changed. Over several decades, input costs for equipment, fuel, fertilizer, and labor have all increased significantly. The dollars received for cattle sold has not increased at the same rate. Therefore, a ranch production system that economically was profitable in the past may no longer be so. The increasing costs associated with operating under the ranch’s historic production model aren’t being matched with the same level of increase in revenue from cattle being marketed. The ranch may be losing money and subsidizing the business with equity, unpaid labor and off ranch income.

For commodity businesses, the value of products and services produced over the long term tends to move toward breakeven. This is especially true if there are not significant barriers for people to enter or exit from that business. If there is the opportunity to make money, and there is the freedom to do so, people will enter the business and increase the supply of the product or service that is profitable. As there is an increase in supply to the market of the product or service, eventually prices will fall. When the fall in prices causes those producing the product to have a loss, they will either decrease their cost of production, reduce the amount of the product they produce or exit the business. This is consistently seen with cattle and other commodity production cycles.

The role of the cattle cycle in a production model
Think of the long-term cattle cycle. When cattle prices are high and cow-calf producers are making money, there is the incentive to produce more calves. When raising calves is profitable, existing and new cow-calf producers will often either buy bred cows or retain more replacement heifers which further reduces the supply of cows and calves going to market. This reduced supply to the market further supports higher prices. Eventually, the heifers retained produce calves, cattle supply increases and market prices go down. When prices go down far enough that cow-calf production isn’t profitable for most producers, there is a selling down of cow herd inventories by ranchers with less equity and higher cost of production to meet financial obligations and some of these producers go out of business. As a result of people exiting the business and a subsequent reduction in cow numbers, fewer cattle are available to the market and prices rise once again.

Therefore, especially in commodity-based businesses, businesses that are continually finding ways to improve their production model, discovering ways to be more efficient, more productive or add value to the products and services they produce are consistently profitable. Ranchers that are not profitable will eventually either exit the business or subsidize the businesses with equity or outside income. An unprofitable economic production model is ultimately a threat to the long-term success of the ranch business.

Questioning a ranch production model
Continually asking questions and being willing to address and make changes will help to ensure the ranch business is economically viable now and in the future.

What are the economics and costs of production for your operation?
What are the economics associated with that production model?
Is the model continually being reviewed and improved to deliver a product at a price that is consistently profitable?
What threats are there currently to the model and what may be threats in the future?
Where are opportunities to change, simplify, or grow in ways that would enhance product value or improve economic efficiency?

The process of evaluating a ranch economic production model can be daunting, a bit unnerving and humbling. Especially when that analysis reveals an economic model that is consistently unprofitable. However, the process can also reveal opportunities to make changes that will help improve business viability and accomplish ownership goals and objectives. The risk of not assessing the economics of the business and just continuing to do what always has been done, “hoping things will work out,” is in fact a decision. It’s a decision to ignore the possibility of opportunities that could improve profitability. It’s a decision that may in fact destine the business to decline and eventual end.

Schedule some time to look at the ranch economic model
Consider the economic value of all the assets and inputs that are being utilized in the ranch operation. Where is value being generated? Where are costs occurring? If market value was paid for the grass grazed, the labor used and the capital investment made in cattle and equipment, would the operation be economically profitable? How many years out of ten would it be so? The opportune time to make changes to the economic model of a ranch is when times are good. When cattle prices are high and cash is available, there are often more options available and some margin to make a transformation to the ranch business.

Speer: Better To Have and Not Need Risk Management Strategy Than Need It and Not Have It

Wed, 16 Oct 2024 23:01:42 GMT

Self-Deceit: Several weeks ago my column featured some recent comments by Howard Marks, Oaktree Capital ( Mr. Market Miscalculates ). He notes that one of the key sources of miscalculation is our inherent tendency towards wishful thinking (i.e. what the market will be). His commentary includes a quote from Demosthenes and one of Charlie Munger ’s favorite phrases to repeat as it relates to investing: “Nothing is easier than self-deceit. For what each man wishes, that he also believes to be true.”

The column also highlighted some discussion about a backgrounder who, based on an email I received, was selling his calves, “because the futures made no sense to [him].” But Mr. Backgrounder was NOT a risk manager – he was a wishful thinker.

He was hoping the market would perpetually work higher, and thus believed it to be true. Alas, when that didn’t occur, it must be someone’s fault. The email I received claimed the culprit must be speculators and subsequent dysfunction at the CME.

But Mr. Backgrounder is, in fact, a speculator himself. I explained that “he’s long the physical market in hopes of profiting from market fluctuations (the very definition of a speculator). He’s betting on the come and a willing participant in bearing that risk.”

Risk Management: The point being, it’s impossible to accurately forecast everything that’s going to happen (no matter how much you may think you know). Markets ebb and flow. And sometimes they’re just downright awful. Financial historian Peter Bernstein reminds us that, ”…history tells us over and over again that the unexpected and the unthinkable are the norm, not an anomaly.”

With that in mind, I noted in Drovers State of the Beef Industry (SOBI) there’s been lots of media coverage on Livestock Risk Protection (LRP) over the past several years. Accordingly, awareness is building among producers. For example, 77% of SOBI respondents indicated they were familiar with LRP – and one-fourth use the program and almost half are considering doing so.

However, the remaining quarter of respondents indicate they “have no intention participating in the next year.” It’s also interesting to note those responses line up with herd size. That is, the average herd size of those using the program was 345 head. The other two categories (considering and no intention, respectively) represent operations with 307 and 229 head, respectively.

IF you’re part of that cut that’s considering LRP, it’s not too early to begin thinking about next year’s calf crop. LRP is an especially easy (not to mention subsidized) means by which to introduce risk management to your operation if you’re not familiar with futures and/or options.

Value At Risk: What’s the upshot to all of this discussion? Namely, things that never happen, happen all the time. Producers should constantly be prepared for the unexpected and unthinkable – that’s especially true given there’s more value at risk than ever in the business.

One of my favorite quotes about risk comes from Lauren Child – author of the Clarice Bean children’s books (perhaps my daughter’s favorite character when she was small). A line from one of her books has stuck with me after many years: “Always remember: it’s the worry you haven’t thought to worry about that should worry you the most.”

That’s why risk management is essential: better to have it and not need it, than need it and not have it.

Nevil Speer is an independent consultant based in Bowling Green, KY. The views and opinions expressed herein do not reflect, nor are associated with in any manner, any client or business relationship. He can be reached at nevil.speer@turkeytrack.biz .

How Do You Know When Agriculture Is In A Recession?

Thu, 12 Sep 2024 15:40:52 GMT

Agriculture can sometimes act as a buffer during broader economic recessions, as demand for essential food items tends to remain relatively stable. However, when multiple indicators align, it can signal a recession in the agricultural sector.

According to analysts and economists, pay particular attention to the following:

Declining farm income. A significant drop in net farm income is a major sign. For example, USDA forecasts another major decline in farm income for 2024, on top of the big decline in 2023. That would be the largest ever two-year decline.
Sharply declining commodity prices. Weak prices for major crops and livestock products can indicate economic trouble for farmers. Crop prices have seen sharply declining prices, with the meat sector showing continued strength.
Elevated input prices costs. When input costs such as fertilizer, fuel and labor remain elevated while commodity prices fall, it squeezes farm profitability.
Reduced agricultural exports. Slowing exports and a growing trade deficit in agriculture can signal economic challenges. USDA forecasts the third straight year of a U.S. ag trade deficit , with the fiscal year 2025 at $42.5 billion.
Debt vs. cash flow. Increasing farm debt relative to cash flow combined with higher borrowing costs due to interest rate increases can strain farm finances.
Weakening credit conditions. Lower repayment rates on farm loans and increased loan renewals/extensions can indicate financial stress.
Declining demand for agricultural products. Reduced consumer spending on discretionary food items during broader economic recessions can impact certain agricultural sectors.
Falling farmland values. Higher interest rates and lower farm profitability can lead to downward pressure on land prices .
Increased inventory levels. Growing stockpiles of crops and livestock products can spur further price declines.
Widespread financial stress. When a large number of farmers across different regions and commodity sectors experience financial difficulties simultaneously it can point to an industry-wide recession.

Your Next Read: More Than 50% of Ag Economists Now Think the U.S. Ag Economy is Already In a Recession

Fraud Alert: Don’t Fall Victim to These Common Schemes

Tue, 02 Jan 2024 20:38:10 GMT

Farmers routinely handle high-dollar transactions — and the nature of the payments, often through unsecure methods, leaves them susceptible to foul play.

Those unsecure methods include mailing personal checks and buying parts from an unknown online vendor. However, one of the biggest fraud trends Angela Lewis, deposit control manager at Southern Bank in Chillicothe, Mo., is seeing involves how many operations handle employee payroll.

“We see employees commit fraud, especially through written checks from employers,” Lewis says. “Employees will steal the account number and routing number off the bottom of checks and create fake checks.”

Mail fraud and check washing is another tactic that can quickly drain thousands of dollars from an account.

“If you have mailed a check that was paid, but the recipient never received it, you may have been a victim of check washing. In fact, check washing is the No. 1 form of fraud we are seeing with our business customers right now,” Lewis says.

Check washing typically involves a check being stolen from a mailbox and then a scammer “washes” the check in chemicals to remove the ink and/or uses a copier to print fake copies of the check. Other criminals can then purchase the fake checks and deposit them.

To protect your operation from scammers, Lewis shares these tips:

Use online banking. “As a business, you should enroll in and use online banking daily to review copies of all checks issued to ensure they were not altered,” she says. “Also make sure to review the backs of checks to verify the endorsement information matches your intended payee.”
Follow up. If you are going to mail checks, make it a habit to follow up with the people or businesses to make sure they receive it.
Switch to online payment options. Your financial institution likely offers e-checks, ACH automatic drafts or other online bill pay options.
Confirm the goods. When it comes to making purchases from an unknown source, such as on Facebook Marketplace or Craigslist, Lewis shares it’s a good idea to meet the seller in person and verify the goods prior to sending the money. “Newer scams we’re seeing involve the use of payment apps, such as Cash App, Paypal, Venmo and Zelle, and social engineering to convince people to send money for fraudulent goods or services or to send money to fraudulent accounts,” Lewis says. “Once the funds have been sent, they are difficult to recover.”

If you do fall victim to a scam, there are a number of organizations, in addition to your bank, available to help. For example, several states have a division within their department of agriculture dedicated to this type of crime.

According to the Tennessee Department of Agriculture’s public information officer Kim Doddridge, the organization’s agriculture crimes unit is responsible for tracking and investigating crimes in Tennessee related to agriculture, forestry and wildland arson, animal health and agribusinesses. While many of their cases are related to livestock cruelty, arson and equipment theft, Doddridge shares they have dealt with reports of cattle purchasing scams, cattle selling scams and email scams.

In addition, USDA’s Office of the Inspector General has a fraud hotline to report violations of laws and regulations in regard to USDA programs. These can be reported anonymously either online or by phone.

Top 5 Most Notorious Cattle Business Crimes Of 2023

Thu, 28 Dec 2023 16:30:33 GMT

There may not be shootouts on Main Street anymore, but Wild West-type scandals are alive and well across the cattle industry.

In 2023 alone, there was a number of instances of theft, fraud and cattle ponzi schemes.

Here’s a look at the top 5 from this year:

Three Florida Men Sentenced in $9-Million Frozen Meat Crime Ring

Arrested for approximately 45 thefts totaling over $9 million in loss, three Florida men were sentenced for stealing semi-loads of frozen beef and pork from packing plants across six Midwest states.

Read the full story here.

Arizona Border Rancher Accused of Killing Migrant, Now Held With $1 Million Bond

An Arizona rancher was arrested in connection with the death of a Mexican national who was shot and killed on the rancher’s property, literally yards north of the Mexican border.

Read the full story here.

Iowa Cattleman Faces 30 Years for Fraud, Theft

A Clayton County, Iowa, cattleman plead guilty Dec. 1 in Cedar Rapids federal court to livestock theft, wire fraud and one count of making a false bankruptcy declaration. The cattleman admitted he operated a large farming operation in Northeastern Iowa and operated an unlicensed custom cattle farm known as “Fawn Hollow.”

Read the full story here.

Texas-Based Cattle Company Accused of $191 Million Investment Fraud

Agridime LLC, Texas-based cattle company, is facing allegations of orchestrating a cattle Ponzi scheme involving $191 million in investor funds and undisclosed sales commissions. The Securities and Exchange Commission (SEC) took swift action, issuing a temporary restraining order, asset freeze and receiver appointment for Agridime on Dec. 14.

Read the full story here.

Kentucky Cattle Scheme With 78,000 Ghost Cattle Unravels

A massive fraudulent cattle scheme allegedly orchestrated by a Kentucky cattleman conned dozens of investors and a prominent agricultural lender out of $100 million, while his family – still grieving over the man’s suicide – faces financial peril.

Read the full story here.

While some of these stories seem a little too wild to be true, considering the prices of cattle and beef in the last year, there’s more reason to believe that these events occur.

Cattle rustling is still a concern, according to state brand inspection and livestock boards across the Midwest.

Read the full story: Cattle Rustlers Target Valuable Livestock: Are You At Risk?

Read More:

2023 Year in Review

Gov. Polis Releases Wolves in Covert Ceremony

Top 5 Risks on Your Operation Explained

Tue, 21 Nov 2023 17:15:17 GMT

How well prepared is your operation to manage risk?

For ag operations, oftentimes successful risk management can make the difference between an operation that runs like a well-oiled machine versus one that seems to constantly be swimming just to stay above water.

“Depending on how your operation runs and where you leverage your pain points, then we can help you put together a risk management plan to make sure that you’re not going to have big effects from your risk areas,” says Ross Bronson, an ag risk consultant with Redd Summit Advisors, in Kansas State University Beef Cattle Institute Cattle Chat podcast .

Additionally, well-managed risks could make the difference in an operation surviving into the next generation.

Here’s a look at the top five risks found in ag operations:

Legal—such as liability, contractual obligations—This includes typical operational tasks, such as delivery of products, as well as an accident that may have occurred on your operation. In severe cases, this risk factor will be best managed alongside a lawyer who is familiar with agriculture, trustworthy and has your operation’s best interest in mind.

Human—such as employee satisfaction, including family members—Though often overlooked, this risk is an important piece of the puzzle. Is the environment of the operation safe, mentally sound and healthy for all involved? Are family members working on the operation treated fairly compared to other employees?

As Robert Larson, DVM, professor of food animal production medicine at KSU says, “If you actually go back and see why family farms and ranches don’t survive another generation, a lot of times it was the human side—family relationship fractures and problems with your landlord and things like that.”

Financial—such as record keeping, as well as taxes, bills and debt—Is your operation actually profitable? Knowing where your operation stands financially through the use of cash-flow statements and balance sheets can be helpful.

Production—utilizing resources to create a sellable return—Looking at your operation, ensure assets are being managed properly and are performing adequately. What is the operation’s average mortality rate of livestock? Are your current bushels per acre comparable to a 10-year average? What changes could be made to increase profit on the operation? Take time to analyze your production practices to ensure your operation returns the most per acre or asset.

Marketing—strategic planning in covering risk of marketable products—Is your current marketing plan providing the best return? Are there value-added programs that could increase profit without increasing labor, time and resources? Forward contracting harvested grain, contracting feed prices at profitable levels and hedging can be ways to manage risks in a commodity-based market.

Which of these areas does your operation do well? Where can your operation improve?

Find a trusted advisor to help you make changes to your operation, if needed, to better manage risk and ensure success in the generations to come.

Use Portability to Avoid a Potential Multi-Million Dollar Estate Mistake

Thu, 20 Jul 2023 18:37:49 GMT

A common financial mistake married farm couples make occurs when the first spouse dies, and the surviving spouse fails to “elect portability.”

It’s a process by which any unused federal gift or estate tax exemption can be transferred from the deceased spouse to the surviving spouse, according to Polly Dobbs, founding partner of Dobbs & Folz, LLC Peru, Ind.

What portability helps the surviving spouse achieve, ultimately, is to put the farm assets in the best position to be transferred upon his/her death, to the next generation without estate taxes being owed.

For 2023, each spouse has a $12.92 million exemption from federal gift and estate taxes, but that amount is set to “sunset” to around $6.6 million each in 2026. Electing portability can lock in that high exemption if a spouse dies before the sunset date.

Straightforward Process
To elect portability, the surviving spouse must file Form 706 Federal Estate Tax Return with the IRS.

“It’s not something that happens automatically, and it’s a crucial action to take – even if all the assets were jointly owned and no taxes are owed when the first spouse dies,” Dobbs says.

“Many certified public accountants (CPAs) and lawyers are unaware of portability, or don’t believe it’s worth checking into, but it is,” she adds. In fact, she tells advisers for their own protection to get it in writing if a surviving spouse declines to elect portability.

Portability is a recent process available to married farming couples, which is why many CPAs and lawyers are not aware of it.

One Form To Complete
IRS has simplified the process to elect portability in recent years.

“A certified public accountant or a lawyer can help the surviving spouse use shortcuts when filing a Form 706 just to elect portability, like skipping appraisals and valuations. The value of the assets may be estimated only to the nearest quarter million dollars of value at the first spouse’s death,” Dobbs says.

Form 706 generally must be submitted to the IRS within nine months of the first spouse’s death. That deadline can be extended automatically with Form 4768, however, for an additional six months.

Additional Time Available
If a surviving spouse missed the initial deadlines for filing, they can still elect portability up to five years from the date of their spouse’s death by invoking “Relief under Revenue Procedure 2022-32,” Dobbs notes.

Dobbs estimates the costs to have an adviser’s help to complete the form and submit the paperwork will total less than $3,000, depending on the assets that need to be reported.

“The costs incurred are minimal when compared to the millions of dollars of estate taxes that could be saved,” she says.

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What is Livestock Risk Protection (LRP)?

Wed, 28 Jun 2023 19:31:34 GMT

While many tools for managing risk exist for livestock producers today, livestock risk protection (LRP) may be a valuable option for producers no matter how large or small the operation.

What is LRP?

Livestock risk protection insurance serves as a price insurance policy developed as a price risk management tool for feeder cattle, fed cattle and swine, and is administered by the USDA Risk Management Agency (RMA), according to a University of Tennessee publication , written by Andrew Griffith, assistant professor and livestock extension economist.

LRP is used to establish a floor selling price and protects producers against catastrophic price declines, such as those at may occur due to a disease outbreak, drought, pandemics or other industry disruptions. However, LRP allows producers to benefit from price increases.

This program does not protect against any type of production risk, such as mortality, condemnation, physical damage, disease, individual marketing decisions, local price aberrations or any other cause of loss, Griffith notes.

“LRP is not designed to enhance livestock producers’ profits, nor does it guarantee a cash price for the cattle,” notes Griffith. “LRP strictly protects against declines in a regional/national cash price index.”

Additionally, LRP provides flexibility for producers in the timing of purchase, length of coverage, number of head covered, target weight of livestock at the end of coverage and the coverage price level, Griffiths adds. Compared to using futures and options as a risk management tool, producers are not subject to margin calls or quantity minimums.

How Do I Sign Up for LRP?

Signing up for LRP requires two forms: the policy/application and a specific coverage endorsement (SCE).
The policy/application is first completed with the provider prior to purchasing LRP. Local agents can be found using USDA’s RMA agent locator site.

When deciding on a specific coverage environment, there are several options to consider.

LRP policies begin on the effective date of insurance purchase and run for the selected number of weeks (13, 17, 21, 26, 30, 34, 39, 43, 47 and 52), completing on the end date. The insurance period for a producer should be the number of weeks closest to when the livestock will be marketed.

Additionally, LRP coverage levels can range from 70% to 100% of the expected ending price (approximately the futures price for the given time period), and is calculated based on the chosen coverage price relative to the expected ending value, Griffith explains.

However, he adds, “It is important to note not all coverage levels or all weeks of insurance periods are offered each day. Therefore, a policy meeting the goals of the operation may not be available today, but such a policy may be offered at a future date.”

Requirements of LRP

To insure livestock using LRP, the livestock must be owned by the producer or family member, and ownership must be maintained until 60 days prior to the SCE end date for the insurance to maintain its value. Livestock do not have to be sold to receive an indemnity payment, as there is no restriction on livestock being marketed after the end date of the SCE.

“Any portion of insured livestock disposed of prior to the last 60 days of coverage results in that portion of the coverage terminating with no indemnity being paid for neither that portion nor any of the premium being refunded,” Griffith explains.

How are LRP Insurance Premiums Figured?

Premiums are figured using the expected ending value of the livestock (near the futures price for the particular end date, derived from the futures market) and a coverage price level (percentages of the expected ending value, chosen by the producer).

Then, the expected ending value is compared to the actual ending value (cash price for the commodity on the end date) to determine if an indemnity payment is to be received by the producer. Specifically, the actual ending value is based on the weighted average price as defined in each SCE.

LRP insurance is offered under the Federal crop insurance programs and premiums are subsidized by the federal government. RMA subsidizes 35% to 55% of the premium cost of a SCE based on the coverage level chosen. Additionally, premiums of LRP insurance are not collected until the end date.

When Does LRP Pay?

“If, on the end date of the policy, the regional/national cash price average (not the producer’s cash price) is below the insured coverage price, the LRP insurance pays an indemnity to make up the difference,” explains Farm Credit Services of America.

While LRP is a price risk management tool available to livestock producers to protect against major financial losses due to catastrophic price declines, it is not meant to increase producer profits. It’s to reduce losses when prices decline and save the producer from losing the farm, Griffith says.

If considering implementing LRP as a risk management tool, find a local agent to discuss more details and determine which SCE is best for your operation.

For more information, visit these USDA RMA provided Fact Sheets:
Livestock Risk Protection Feeder Cattle
Livestock Risk Protection Fed Cattle
Livestock Risk Protection Swine

Small-Town Bank CEOs are Cautiously Optimistic, says Rural Mainstreet Index Survey

Fri, 26 May 2023 01:48:43 GMT

For the second month in a row, the Rural Mainstreet Index (RMI) showed a positive sentiment in general among rural bank CEOs located across a 10-state region, with emphasis in the Midwest.

The region’s overall reading in May climbed to 55.8 from April’s 50.1, says Ernie Goss, chair in regional economics at Creighton University’s Heider College of Business. Even so, only 11.5% of the bankers reported improving economic conditions for the month, with 88.5% indicating no change in economic conditions from April’s slow growth.

The Index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

Interest Rate Hikes Put Pressure On Farmers

“Things are looking more positive for businesses on rural Main Street, but less positive for the agricultural sector,” Goss told AgriTalk Host Chip Flory earlier this week. “Farming is not quite as strong now as what we saw at this time last year, and even earlier this year. With the higher costs for the farm sector – especially interest rate increases – that’s putting a little pressure on farmers. When we asked them about farmland prices, these CEOs are not nearly as positive looking forward.”

Bankers reported that non-pasture farmland prices in their area grew by an average of 4.3% over the past 12 months. However, they project 0.0% price growth for the next 12 months. Read more about the issue here: Sudden Slowdown? Farmland Expert Sees Fewer Buyers, More No Sales And a Plateau in Prices

Goss helped develop and implement the monthly RMI survey, which gathers economic insights from bank CEOs in approximately 200 rural communities with an average population of 1,300.

Will More Banks Report Insolvency Challenges?
Flory raised the question of whether rural banks are healthy or entering any financial headwinds, given the expectation of lower farmland prices and lower commodity prices this year. In the process, Flory also referenced the farm crisis of the 1980s. “The farm crisis got really, really serious when it turned into a Savings & Loan crisis, as well,” he recalls.

Goss’s take is that rural banks are doing reasonably well, though their deposits are down—at the second-lowest rate since the RMI monthly survey began in 2006.

“That’s not good, of course, but when we come to the overall health of rural banks, they remain very positive, but they’re very concerned about having to pay for the failures of the regional banks—Silicon Valley Bank, Signature Bank and First Republic,” Goss told Flory.

The RMI survey reports that only 15.4% of bank CEOs anticipate the end of the banking insolvency crisis, while the remaining 84.6% expect some banks to continue to report insolvency challenges.

“The liquidity problem will continue for some time, and we will see more regulation because of it,” said James Brown, CEO of Hardin County Savings in Eldora, Iowa, in a news release Goss’s office distributed. “And as a bonus for their (regulators) being late to the table, we will all pay higher FDIC payments for as long as we can see.”

Likewise, Jeff Bonnett, CEO of Havana National Bank in Havana, Ill., said: “I hope that the ICBA and state community bank associations can be successful in clarifying my point as ‘community banks’ should NOT pay for this big bank mess with increased FDIC assessments.”

Mergers Are One Likely Outcome
Goss says part of the concerns bankers have dates back to the banking crisis in 2008-09, when the region surveyed lost between 40% and 42% of rural banks through mergers and insolvencies.

“Now, that’s not going to happen this time, but nonetheless, we will see some mergers,” Goss told Flory.

Looking ahead to June, Goss says bank CEOs are concerned about the potential impact a potential rate hike by the Fed on June 14 might have on farmers and other rural business owners who are dealing with increasing costs and specific to commodity prices, weakened revenues.

“These rate hikes are just creating more problems than solutions right now,” Goss says. “Unfortunately, inflation continues to be much higher than the Fed’s target, even while they’ve raised interest rates by five percentage points over the last year plus a few months.”

Mike Van Erdewyk, CEO of Breda Savings Bank in Breda, Iowa, echoed Goss’s concern. “Federal Reserve rate changes are being perceived as ‘paper cuts’ and not solving the problem.”

Debt Crisis Deliberations Could Influence Rate Hikes
Goss ventures the likelihood of a rate hike in June by the Fed at about 50-50.

“A lot of it depends on what happens with the debt crisis deliberations going on right now in D.C.,” he told Flory. “If that gets settled very quickly and positively, that would push the Fed toward a rate hike. Any other bank failures or bank problems could facilitate a pullback and less of a chance of a rate hike.”

Listen to the entire discussion on AgriTalk here:

Want to Grow Your Farm? Ask These 10 Questions First

Wed, 17 May 2023 19:57:51 GMT

More than 50% of farmers intend to grow their operation, based on responses in Purdue’s February 2023 Ag Economy Barometer.

(Farm Journal)

If you’re thinking about scaling your farm, Michael Langemeier, Purdue ag economist, says it’s important to first ask these questions.

1. Why should I grow my operation?

Before an operation expands, consider the vision and direction you want your farm to take.

“Are you interested in a commodity-based approach or a differentiated product strategy? Commodities will focus on cost control while products will be centered around value-added production and above-average prices for your crops,” Langemeiers says. “Start here and consider how growth impacts your direction.”

Once an approach is chosen, it’s time to decide which dominoes you want to play in the expansion game.

2. What ways I can grow my farm?

There are many ways to expand an operation: acquire land, new equipment and technology, upgrade facilities, etc. However, Langemeier says some producers need to think outside the box.

“Don’t just think about what you currently do or have always done. This step is a good time to do some soul searching to consider where you want to be in five to 10 years. Do you want to be the same enterprise, or do you want to make changes?”

Langemeier says this soul-searching step is especially important when someone is coming back to the farm.

“We’re seeing that a lot of students who come from farms want to go back, and we have to look into whether there are opportunities there or not,” Langemeier says. “There’s always new interest and ideas that come with the transition back to the farm.”

After establishing how you want to grow, consider your growth approach.

3. What should my growth approach look like?

A strengths, weaknesses, opportunities and threats (SWOT) analysis is a common growth approach in business. Langemeier says another way to think about SWOT is in terms of internal and external analysis.

“Internal analysis means looking at key resources and capabilities of a team or operation,” Langemeier says. “Does someone possess a unique skill you can maximize? Take advantage of those unique skillsets.”

Internal analysis mainly centers around strengths, but weaknesses play a role here, too. Are there areas in your operation that need professional development? Langemeier says this is the time to work on both.

External analysis, on the other hand, examines economic and market trends.

“The easiest example is in livestock; raising pasture pork, poultry or beef, or offering direct meat from a producer rather than a grocery store, are all growing trends,” Langemeier says. “If you have those opportunities, think about how they might fit into your operation.”

While there’s more risk in external factors, Langemeier says “the risk can be worth the reward” for producers who understand what trends they can support.

4. How do I evaluate my farm’s growth ventures?

Now that the growth options are laid out, how does a producer choose which option to pursue?
These eight criteria can help:
• Strategic fit
• Expected returns
• Risk
• Capital required
• Cost and ease of entry and exit
• Value creation
• Managerial requirements
• Portfolio fit

Strategic fit is one of the biggest points to consider, according to Langemeier.

“A few years ago, many growers were interested in hemp production. I would ask them if hemp would require new machinery and if they were used to dealing with contracts,” he says. “If the answer was yes and no, then it probably wasn’t going to be a good fit.”

He says ease of entry and exit is the second criteria he points farmers to.

“If your farm were to pursue a new venture and it fails, would it mean you could lose the whole farm? Because there will be things that fail,” Langemeier says.

If a specific venture requires a lot of capital, he says it is pivotal to explore how the investment could affect balance sheets in the long run.

5. What skills are needed to grow, especially in people returning to the farm?

Taking stock of employees’ skillsets, this is the part where growers consider the strengths and weaknesses of human capital currently on the farm and those soon returning to it.

“When someone’s thinking about coming back to the farm, that’s the time to assess the skills that are currently needed, and then try to encourage the younger person to garner some of those skills,” Langemeier says. “We might have the skills to expand our operation, but do we have the skills to start a new venture in a different enterprise? Think about it from all angles.”

6. How do I finance?

Are you willing to take on debt to expand? If so, how much debt are you willing to take on? Langemeier suggests looking at debt as enabling you to take advantage of an opportunity, not as a negative.

“If you have 2,000 acres and are thinking about adding 1,000 acres, even if that’s leased ground, you’re still going to need more machinery and people. You probably don’t have that retained earnings, so you’re going to take on debt,” he says. “As long as you’re making a profit on those additional acres, and you can make the debt payment, it’s not a problem.”

Langemeier warns that a small profit margin can quickly turn into an issue when a venture flops. He advises producers keep a somewhat equal balance of debt and projected venture profits.

7. What business models do I use to grow?

Expanding internal growth with retained earnings and debt is a typical business model for most operations, according to Langemeier. He says there’s a new trend in this arena.

“I’ve seen a lot of production ag cases recently where a farm acquires assets from a retiring farm,” he says. “Not only do they farm the land, but they also buy the machinery, the bins and the whole farm. This really works for some operations.”

Another model that’s becoming somewhat common is a joint venture. Agribusinesses use this model frequently, but Langemeier says more mid-sized operations are leaning toward this option.

“One of the advantages of joint-venture contract turkey, laying or finishing operations, especially in the Corn Belt, is that there’s a partner with you,” Langemeier says. “It allows us to grow effectively.”

Finding a partner to go-in on the venture isn’t always easy. However, Langemeier says producers often look in the wrong places.

“Some farmers say they don’t have any outside investors, so I tell them to think about family or non-farm heirs. Pitch it as a way of investing in your business so that you don’t have to make them partners or an operating entity,” he says. “Land, for instance, could be an outstanding source of outside equity with non-farm heirs.”

8. How would an expansion impact my current operation?

When considering growth options, it’s vital to your growth success to consider how each option will impact the farm’s balance sheet and income statement. Langemeier suggests running three projected scenarios — worst, most likely and best case — through a spreadsheet or a software, like the University of Minnesota’s FINPACK system .

If you choose to run the projections by hand, this is the process Langemeier suggests:

a. Impacts on cash flow and balance sheet

“A growth change will impact both — don’t just look at cash flow,” he says.

b. Debt versus equity

“Maybe the change will reduce your liquidity and increase your solvency too much,” he says. “If that’s the case, you can’t pursue that particular venture.”

c. Time management

“There are only so many hours in the day, and some of us sometimes work too much,” Langemeier says. “Say you’re going from conventional to organic, it’s going to be management intensive. Be realistic about what you and your team can handle.”

9. What challenges would an expansion create?

Construction delays, cash flow shortages, depleted working capital, short-term inefficiencies and management bottlenecks are often at play when starting a new venture, according to Langemeier. He advises producers to be proactive.

“If a venture creates massive cash flow shortages and eats into your working capital, you need to have a plan to deal with those issues. If you don’t, it will lead you into other challenges, like inefficiencies, and you’ll end up with a failed venture,” he says. “Make sure you have a contingency plan.”

10. What is my sustainable growth rate?

Calculating a sustainable growth rate means saying what a growth rate would be if retained earnings is the only money used, and then compare that to what a growth rate would be if only debt was used. Langemeier says this equation has other variables that often go unchecked.

In the debt scenario, he says you have to think about the downside of debt — the chance of going bankrupt and variability.

“Even if your operating cash flow is low, the lender still wants his payments,” Langmeier says. “You have to think about the coping strategies to make those debt payments even when corn is at $5, compared to $6.50. Make sure you run all the numbers imaginable.”

The Main First Step When Considering Expansion

With all 10 points in mind, Langemeier says the first stage of growth shouldn’t include producers running to formulate a 50-page business plan. He says step one starts with a conversation.

“You should be having regular farm and family meetings, at least once a year, to brainstorm with your employees and family members about the things you could do differently on-farm, and allot time to consider continued improvement, opportunities and threats,” he says.

According to Langemeier, these meetings will offer more than exploring growth; they will ensure farm, family and employee survival.

Senate Ag Leaders Ask for More Farm Bill Funds

Thu, 06 Apr 2023 21:52:24 GMT

Senate Ag Committee leaders penned a letter this week to the Senate Budget Committee, requesting additional funds to complete the 2023 farm bill. Chairwoman Debbie Stabenow (D-Mich.) and Ranking Member John Boozman (R-Ar.) said drawing on reserves “to strengthen farm and food safety nets” became clear in farm bill hearings.

Pulling from reserve funds will help put an end to ad hoc disaster assistance, according to Stabenow and Boozman.

“Since 2018, the Federal Government has approved more than $90 billion in ad hoc assistance for farmers and ranchers in response to Chinese tariffs on U.S. agricultural exports, the pandemic, and increasingly unpredictable climate-related disasters,” the letter says. “A commitment to additional financial resources for the farm bill will help to transition our farm and food supplies away from ad hoc support.”

Risk Management in the Farm Bill

Stabenow and Boozman also mentioned their concern in the status of the Congressional Budget Office’s (CBO) ag market data that is needed to quantify risk management in a farm bill.

“CBO currently projects 10-year average commodity prices that are well below price projections from leading subject matter experts at the USDA and demonstrate a much faster decline toward a long-run average price,” the committee members wrote. “As a result, estimates of changes to risk management tools in the farm bill will likely reflect greater increases in direct spending than if CBO commodity price projections and trajectories were more in line with those of leading industry experts.

The CBO data was to have been released over one year ago. To help expedite the process, the Senators requested the Budget Committee supports them in working with the CBO to secure “accurate” information in a timely manner.

Farm Bill Spending Assurances

The letter also urges no funding cuts for the panel to write the next farm bill.

“As the Committee on the Budget considers federal spending for FY 2024, we ask that you help us maintain certainty for agriculture producers, families, and rural communities, and propose no cuts to food and agriculture spending,” the letter said.

What Do Americans Want to See in the 2023 Farm Bill?

Wed, 29 Mar 2023 20:24:36 GMT

American Farm Bureau Federation released a survey on Wednesday, which shows the majority of respondents agree that nutrition and risk management should be top funding priorities in the farm bill.

Historically, the nutrition title, including Supplemental Nutrition Assistance Funding (SNAP), takes the majority of the farm bill cake, as was seen in 2018 when nutrition made up 76% of the budget.

(Farm Journal)

The Congressional Budget Office, in its 10-year Budget and Economic Outlook , raised the cost estimate for SNAP by $93 billion over the next decade. Sen. Joni Ernst (R-IA) says this is where the greatest farm bill debate will take place.

“If you’re an able-bodied, single male with no children, then you should certainly be working and providing for yourself,” Ernst says. “We have to make sure those funds aren’t abused at the expense of the taxpayer while making sure those needy families do get the support they need.”

While nutrition programs have taken focus, inflation is top-of-mind for Americans.

Addressing Inflation

According to survey results, 86% of respondents are concerned about food inflation. And the issue didn’t go unnoticed by Rep. Austin Scott (R-Ga.) in a recent House Ag Committee hearing .

“I think everybody in America that is watching this is smart enough to recognize the volume of food, as we’ve seen with eggs, there are supply-and-demand issues there,” Scott said to Tom Vilsack, USDA secretary. “No matter how much you give somebody in SNAP benefits, the cost of groceries continues to go up…”

Scott attributes the inflation to “bad” policy, which leads to less food availability. He says food security starts in the farm safety net and program titles, not nutrition.

Risk Management

So, where will risk management fall in the farm bill debate if food insecurity is America’s second-largest concern? Sen. Chuck Grassley (R-IA) says he’s made a point to hold space for risk conversations, particularly insurance, in hearings.

“What we need to do is make sure the crop insurance program is kept as the most useful safety net tool for the family farmers—that’s 86,000 in Iowa, and over the country as a whole about 2% of our population are involved in ag, producing the food for the other 98%,” Grassley says. “And that 2% needs consideration, considering how important they are to the livelihood of everybody else.”

But there is a chance the insurance title could be “reworked” all together, according to Kala Jenkins, Pinion ag consultant.

“I’ve heard chatter about whether we need to change the way some of these programs work today, like whole farm crop insurance programs versus the noninsured crop disaster assistance program.” she says. “Then there are also some stakeholders questioning whether we need to link insurance to conservation, while others don’t want it to be the main focus. The needle is all over the board.”

What’s at Stake

With so much uncertainty in the farm bill arena, it begs the question of whether a farm bill will be passed in 2023. And most American’s understand what those repercussions would look like, even if they aren’t involved in ag.

When questioned about whether they think a farm bill passage or delay would impact the country, their state, community family and themselves, respondents forecast the biggest impact would be on the country and the smallest impact landing on themselves.

These results may have something to do with consumer’s trust in producers. According to the survey, 89% of adults trust farmers, which has remained steady since 2019.

“Almost nine in ten adults trust farmers, which will be important as we work to inform the 260 lawmakers who weren’t in Congress when the last farm bill was written,” says Zippy Duvall, AFBF president.

Agro-Terrorism and the Food Supply Chain: This is a Different World, Rose Says

Mon, 10 Oct 2022 23:43:03 GMT

If you want to disrupt a government, disrupt the food supply.

“Agriculture is critical infrastructure,” Andrew Rose, strategic advisor to the food and agriculture supply chain, said during Farm Journal’s Farm Country Update on Sept. 28. “Three weeks without food and agriculture, and it’s over. You don’t mess with food and ag.”

Years ago, Rose was working at a large agricultural lender and decided to run a tabletop exercise as part of a teambuilding workshop simulating a ransomware attack on the company.

“Walking away from that exercise, I began thinking, is this a blind spot in the food and agriculture supply chain? Are we aware of the threats out there and the implications they can have? Not only to us as producers and processors, but to the entire critical infrastructure, and our ability to feed our population? I kept getting more questions than I got answers,” Rose said.

Since then, Rose has dedicated himself to helping the agricultural community get more prepared and understand the threats knocking at the gate.

What is Agro-Terrorism?

Agro-terrorism, or the deliberate introduction of a disease agent against livestock or into the food chain, is typically a tactic that can be used to either generate or cause mass socio-economic disruption or as a form of direct human aggression. Rose says there are a lot of definitions out there, but from his research, for a terrorist act to occur, there needs to be violence.

He said the FBI constantly hammers home the concept of sympathy versus action. Rose points out that having strong feelings about something isn’t wrong – acting on it is.

“There’s a First Amendment right to say and feel what you want to about any given subject. You can walk outside and put posters up, you can get a bullhorn, cowbells, whatever you want. As soon as you take an action, though, that’s when things change. That’s when risk and consequence come into the equation,” Rose said.

For the agriculture community in particular, it hurts when someone stands outside of your property and waves a sign, says bad things or shows a picture of things that aren’t true, he said. But until these people take action – until they steal some pigs or commit an act of violence – it’s their right to do that.

“It’s a hard pill to swallow, but it’s something that if you go to the FBI, they’ll say sympathy versus action,” Rose said. “Don’t take that action.”

How Can You Protect Yourself and Your Farm?

1. Pay attention to the threat actors.
Know who the threat actors are, including transnational terrorist groups, domestic terrorists, corporate espionage and activists. Engage with organizations like the Animal Agriculture Alliance and Protect the Harvest to keep up to date on threats and movements. Subscribe to their newsletters and learn from their experts.

2. Guard yourself on social media.
“Not only is social media a real threat, it’s an ongoing threat,” Rose said.

When he’s speaking to agricultural audiences, the first thing he tells them to do is go to Facebook, click on their privacy settings, and find out which apps and websites they are connected to with their account. Some apps can trick you into clicking “OK” allowing them to sell your information to third parties.

“There are computer programs scraping every bit of social engineering that’s publicly available on every human being and compiling it so they have those demographical profiles, whether it’s specific to you as an individual, or you as a class of individuals for certain types of messaging,” Rose said.

3. Beware of passive insider threats.
Passive insider threats are people who resist change and fall victim to social engineering. Sometimes, they’re told to do certain phishing exercises, or complete multi-factor authentication for their accounts, and they ignore it.

“They use their work devices to go to personal websites or places they probably shouldn’t go and they click on things they shouldn’t click on. Every employee of every company or organization is part of its cybersecurity defense,” Rose said. “If they’re not paying attention, if they’re not actively aware of the opportunity that threat actors are looking for, and they’re just letting them in, that’s a big insider threat.”

4. Know your FBI agent.
If something happens to your organization, whether it’s a terrorist attack or cybercriminal attack, it’s likely you will be in a high state of emotion. Rose said that’s probably the last time you want to make your first introduction to your FBI agent.

“There are 56 field offices across the United States. The FBI is there to help victims of crimes, they’re not going to go through your filing cabinets and look for other things. They want to help you. They want to figure out who did it, how they did it, and they want to go and oppose risk and consequence on your behalf,” Rose said.

That is why he suggests calling your local FBI agent or at least finding your point of contact before a problem happens.

“The world will never be the way it was – those days are gone, it is not coming back,” Rose said. “The world is as it is today, and we need to be realistic about how it’s going to be tomorrow. The ability for us in the U.S. to feed our population, that’s the North Star. Let’s make sure we do that. Be suspicious and be aware, this is a different world.”

Check out Farm Country Update and learn more from Andrew Rose about how you can protect yourself, your farm and your agricultural business.

Top 5 Risks on Your Operation: Are You Prepared?

Thu, 22 Sep 2022 17:04:00 GMT

How well prepared is your operation to manage risk?

For ag operations, oftentimes successful risk management can make the difference between an operation that runs like a well-oiled machine versus one that seems to constantly be swimming just to stay above water.

“Depending on how your operation runs and where you leverage your pain points, then we can help you put together a risk management plan to make sure that you’re not going to have big effects from your risk areas,” says Ross Bronson, an ag risk consultant with Redd Summit Advisors.

Additionally, well-managed risks could make the difference in an operation surviving into the next generation.

Here’s a look at the top five risks found in ag operations:

Legal—such as liability, contractual obligations—This includes typical operational tasks, such as delivery of products, as well as an accident that may have occurred on your operation. In severe cases, this risk factor will be best managed alongside a lawyer who is familiar with agriculture, trustworthy and has your operation’s best interest in mind.

Human—such as employee satisfaction, including family members—Though often overlooked, this risk is an important piece of the puzzle. Is the environment of the operation safe, mentally sound and healthy for all involved? Are family members working on the operation treated fairly compared to other employees?

As Bob Larson, DVM, says, “If you actually go back and see why family farms and ranches don’t survive another generation, a lot of times it was the human side—family relationship fractures and problems with your landlord and things like that.”

Financial—such as record keeping, as well as taxes, bills and debt—Is your operation actually profitable? Knowing where your operation stands financially through the use of cash-flow statements and balance sheets can be helpful.

Production—utilizing resources to create a sellable return—Looking at your operation, ensure assets are being managed properly and are performing adequately. What is the operation’s average mortality rate of livestock? Are your current bushels per acre comparable to a 10-year average? What changes could be made to increase profit on the operation? Take time to analyze your production practices to ensure your operation returns the most per acre or asset.

Marketing—strategic planning in covering risk of marketable products—Is your current marketing plan providing the best return? Are there value-added programs that could increase profit without increasing labor, time and resources? Forward contracting harvested grain, contracting feed prices at profitable levels and hedging can be ways to manage risks in a commodity-based market.

Which of these areas does your operation do well? Where can your operation improve?

Find a trusted advisor to help you make changes to your operation, if needed, to better manage risk and ensure success in the generations to come.

Is the Livestock Industry Prepared for a Foreign Animal Disease Outbreak?

Wed, 10 Feb 2021 16:07:03 GMT

Foreign animal diseases (FAD) are a constant threat to the U.S. livestock industry. But the country seems more tuned in to this struggle than ever before with the recent COVID-19 pandemic. National Pork Board’s chief veterinarian Dave Pyburn and National Cattlemen’s Beef Association’s chief executive officer Ethan Lane shared their perspectives during the Coalition for Epi Response, Engagement and Science (CERES) Biosecurity Infectious Disease Symposium at Colorado State University on how prepared the pork and beef industries really are when it comes to the threat of FADs.

Pork Industry Adopts AgView
When African swine fever (ASF) was discovered in China in August 2018 and rocked the global pork industry, the National Pork Board, among others, began looking at ways to increase foreign animal disease preparedness efforts in the U.S. One of the many positive steps forward since then has been the creation of AgView, a voluntary option for producers to keep records on animal movement that could be easily shared with their state veterinarian in the case of a FAD outbreak.

“We wanted to find a way to add to that data that’s currently available to both state and federal animal health officials as they look to respond to a FAD. Not only did we want to help find the disease more quickly and eradicate the disease more quickly, but also get back to some business continuity as quick as we can,” Pyburn said.

After evaluating the current preparedness plans, the National Pork Board decided one area the industry needed to hone in on was pig movement and contact tracing.

“That’s the majority of the way that we move animal diseases in our country today – through animal movement,” Pyburn said. “So, we asked ourselves how we could supply real time pig movement data to officials so that they could have the information needed to respond more efficiently and quickly to enable business continuity to whatever degree possible.”

That’s where the idea of Ag View came into the picture – creating an opportunity to work hand-in-hand with current systems in place and ultimately help improve that response.

Beef Industry Sees Similar Challenges
Lane said he sees a lot of similarities between what the pork industry is doing and what the beef industry is doing in the area of FAD preparedness.

“I think we’re trying to tackle a lot of the same challenges, in accessing that information and interfacing with a lot of different state programs,” Lane said. “The states are all warehousing data in different ways, that’s a lot of what cattle trace has been focused on and what our inner NCBA working group has been focusing on.”

Dealing with different views from producers, making sure they are assuaging everyone’s concerns about how information like this can be used to help them and balancing all of this against the need to quickly access information in the event of an outbreak, is a challenge, he explained.

“Whether it’s debating how many different data points are really necessary to quickly get to the right information or how do we ensure the safety and security of that information to some practical challenges on the ground, particularly with cattle movements,” Lane added. “If you look at our Western guys that are using pastures and grazing permits sometimes in different states, a pasture ID versus centering that on a home ranch operation. Those become very important data points to work through and that’s been a large part of the focus on our conversation over the past few years.”

Teaming Together
The AgView system could be launched for other livestock species, Pyburn said. Discussions have been underway between the pork and beef industries about how this system could bring other commodities and their information into this same system.

“In the end, what the federal and state animal health officials want is one dashboard to be able to use no matter what that foreign animal disease is,” Pyburn said. “We’ve got some foreign animal diseases, like foot-and-mouth disease in particular, that will involve both of us so it we’re going to want all of that data in one spot for those folks to respond.”

In addition to teaming together among species, Pyburn said it requires a team effort from producers, too. AgView is 100% voluntary. The nice thing about AgView is that producers can have their current data in the system, and it’s only visible to the producer that has entered the data, he said.

“The only time the data goes forward is if we actually have a foreign animal disease outbreak and there’s a need for it because the producer is involved in the incident or is within the outbreak area. When that happens, the state or federal animal health officials will request permission from those producers to be able to see it,” Pyburn said.

The producers still have the right to say no and that data will go nowhere. But Pyburn cautioned that may also hamper the animal health official’s ability to get back to some animal movements that would ensure business continuity.

“I think there’s going to be some need, or some want on the part of the producer, to be able to supply that data,” he said.

Meanwhile, on the cattle side, Lane said the industry is likely moving into an arena over the next few years where there is going to be a mandatory component for producers that are moving cattle across state lines.

One of the concerns Lane often hears is the cost and the fact that at the end of the day, a lot of the cost will be borne by those producers on the ground.

“We are going to need to have more extensive conversations on Capitol Hill,” Lane said. “We are going to probably be seeking out additional resources to implement a more comprehensive system so that cost isn’t being borne solely by the beginning of the supply chain.”

Watch these webinars for more:

Don’t Take Your Eyes Off of African Swine Fever

Technology, Traceability and the Beef Industry of the Future

Read More:

What Happens If? An Answer to the Question Everyone’s Asking

Vilsack Weighs In On Parallel Between COVID-19 and Animal Disease Outbreaks

Ranchers Split on Need for Traceability System

African Swine Fever: Trust Your Instinct, Be Prepared

What Makes Foot-and-Mouth So Infectious?

Tool Helps Develop Custom Biosecurity Plan for Disease Prevention

7 Steps to Create a Biosecurity Plan

How to Protect Your Ranch and Prevent Cattle Theft

Fri, 20 Nov 2020 05:55:25 GMT

The pasture was ridden and re-ridded. Gates, fences, and water gaps were checked to make sure the cattle hadn’t gotten out. Three different people counted the herd – all three came up 60 head short.

“They weren’t just in another pasture,” says Andee Leininger of Leininger Ranch. “They were gone.”

It was a shocking blow to Leininger, a young cattlewoman helping her parents on a family ranch located south of La Junta, Colorado. Facing cattle theft while attempting to continue a family business is devastating, Leininger says.

“We have been on that place for 25 years and have never had anything stolen,” Leininger said. “It definitely wakes you up.”

Weeks later, by some miracle, the stolen cattle returned.

“They just showed up in the pasture [Wednesday] morning,” Leininger says. “We don’t know where they’ve been for three or four weeks, how they got where they did or how they got back.”

Cattle theft could increase

It was a miraculous turnout for Leininger Ranch. However, with the economy in a downturn and increasing panic about the COVID-19 pandemic, cattle and agricultural property theft could increase, says Ben Eggleston, special ranger for the Texas and Southwestern Cattle Raisers Association.

“Every time there is a downswing or times get hard, some people will revert to stealing,” says Eggleston, who is actively investigating the theft of 262 stocker calves in Lipscomb County, Texas. “If things don’t start picking up, people will start picking things up.”

That sentiment is echoed by CJ Fell, a criminal investigator for the Nebraska Brand Committee.

“We have not seen an uptick in cases yet, but I suspect it is going to happen,” Fell says. “With any emergency situation, people find opportunities to take advantage of other people.”

Both livestock law enforcement officers said ranchers should take additional steps to protect their livestock and to make theft more difficult. Ultimately, cattle theft can be easy to accomplish, Fell admitted.

“It doesn’t take much knowledge or experience to gather some cattle and load them,” Fell says. “Once you’ve got them loaded, it’s just a matter of drive time to get out of state to a non-brand area.”

How to protect your herd from theft

The best way cattle producers can prevent theft is to keep accurate records, Fell says. In the case of a partnership, partners need to brand their cattle differently and jointly document which cattle belong to which partner.

“Things have got to be down on paper,” Fell says. “That is the only way these producers can protect themselves.”

Fell and Eggleston offer the following advice to deter theft:

Lock gates, pastures and corrals
Permanently identify livestock and equipment (consider marking tack with your driver’s license number)
Take pictures of equipment
Consider branding cattle

A brand is the easiest way to trace livestock back to their rightful owners. Without a brand, cattle are an easy target for theft, Eggleston says.

“That is prima facia evidence that registered brand on that livestock belongs to that person,” Eggleston says.

The culprit of the Leininger Ranch incident was an individual who knew the ranch well, Leininger says, adding that the cattle were more than a mile from the closest road. Unfortunately, victims of agricultural theft usually know the culprit, Eggleston says.

“I hate to think of the percentage of cases where we’ve had a successful conclusion and you find out you know who stole from you,” says Eggleston, who has spent 30 years in law enforcement and 15 years as a TSCRA special ranger. “You have to know who you are doing business with.”

If ranchers suspect they are the victim of cattle theft, it is imperative to immediately alert authorities to increase the chances of recovering stolen property, Fell adds.

On Leininger Ranch, there will be more people to check cattle and keep a closer watch in the future, Leininger says, adding that she will probably scale back some of her off-ranch commitments to help her parents.

“People are following in their family’s footsteps by raising cattle,” Eggleston says. “It is very personal when somebody steals from something that is a legacy.”

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A Flexible Marketing Approach Can Pay Off

Thu, 19 Nov 2020 01:41:15 GMT

A common theme I hear from cattle feeders of all sizes and geographies is “marketing flexibility” represents a growing part of their feeder cattle buying strategy. The ability to role with the punches and adapt to volatility in markets, environments, labor and other hard-to-control variables is essential. Any level of additional precision that can be added to this process has value. Feeder cattle that provide options or the flexibility to navigate fields laden with “risk land mines” are far more appealing than those that can’t.

Sometimes, the slightest of differences between groups of feeder cattle can significantly affect their value when sold as fats. Buying the right cattle that best fit all the dynamics that will affect their value at time of harvest, such as spreads in the futures markets and the values of Choice or higher quality beef carcasses are very important. Understanding these subtle nuances can help you more effectively market your future calf crops.

Factors such as calving dates and length of calving period can affect value more than you realize. There is substantial value differentiation between a steer weighing 700 lb. by Nov. 1 versus one that will weigh 700 lb. a month later. If you calve in a time frame that makes it tough for your feeders to finish and harvest on the April live cattle board, which is currently worth about $9 per cwt more, they will be worth less than identical cattle that will.

Fat cattle that will be sold and harvested during that prime April period have historically benefited from large spreads in both the live cattle markets and the available premiums for higher quality carcasses. That extra value filters back down to the ranch through true demand-driven pricing.

The real value of cattle with marketing flexibility comes into effect with those that sell outside of the April window. To demand a better price, steers or heifers must offer the extra layers of versatility needed when selling as finished cattle during periods of tight spreads. Narrow margins drive the need for flexibility. Having options to secure some profit, or minimize a loss is very important.

You might assume all cattle with potential genetic advantages for marbling and yield get funneled toward carcass premium grids. In many cases, that does tend to be true; however, groups of cattle that have the ability to capture carcass premiums might be sold live rather than on a grid when market conditions dictate that as the best strategy. When the packer’s live bid locks in or secures a solid profit, cattle feeders will evaluate the risk reward equation for selling on a grid versus live. This is precisely why cattle that grow and grade are more desirable. They provide more flexibility as well as opportunity for profit.

The market channel that offers the greatest opportunity at time of harvest might not have been the initial strategy the cattle were bought and slotted for. The more versatile your cattle can be with regard to merchandising options at that time, the greater the value they will potentially demand. This makes understanding the importance of those traits related to profitable cattle feeding and genetic selection tools more important than ever.

A Flexible Marketing Approach Can Pay Off

Thu, 19 Nov 2020 01:40:55 GMT

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Want to Grow Your Farm? Ask These 10 Questions First

1. Why should I grow my operation?

2. What ways I can grow my farm?

3. What should my growth approach look like?

4. How do I evaluate my farm’s growth ventures?

5. What skills are needed to grow, especially in people returning to the farm?

6. How do I finance?

7. What business models do I use to grow?

8. How would an expansion impact my current operation?

9. What challenges would an expansion create?

10. What is my sustainable growth rate?

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A Flexible Marketing Approach Can Pay Off