Extension Risk Management Education Ronald Rainey Director Southern Risk Management Education Center University of Arkansas Website: http://srmec.uark.edu/ Email: srmec@uark.edu

Managing Risk in Farming ERME (RMA) defines risk across five categories: Production Price or Market Fi The most important role for a farmer is that of manager. For an individual farmer (manager), risk management involves finding the preferred combination of activities with uncertain outcomes and varying levels of expected returns. Risk management can then be defined as choosing among alternatives to reduce the effects of risk. This requires an evaluation of tradeoff between changes in risk, expected returns and entrepreneurial freedom among others. The focus must be on the “risk that matters.” This may involve the prospect of losing money, possible harm to human health, repercussions that affect resources or other events that affect a person’s welfare.

SRMEC Priority Risk Areas Each project should have a plan for capturing measurable qualitative and quantitative economic effects and/or behavioral changes related to risk management. Projects with detailed evaluation plans that capture higher level producer impacts (i.e. implement versus understand across the ERME spectrum of producer actions) are ranked higher.

Proposed Results & Producer Actions Five levels of producer actions in order of increasing producer engagement: Understand Analyze Develop Decide Implement Knowledge Short Term Actions Intermediate Conditions Long Term

SRMEC Priority Risk Areas Develop and deliver programs and decision tools to help producers evaluate and implement a transition to new enterprises or production systems, including traditional and alternative strategies. Equip producers to analyze and implement existing and new crop insurance products. Develop and deliver programs to help producers attract, train, and retain employees. Develop and deliver programs to help producers avoid, diagnose and manage financial stress, including financial stress testing, farm finances and evaluating on-farm investment decisions. Teach producers to develop and implement marketing strategies using appropriate tools such as futures and options, contracts, direct marketing, social media, and etc.

SRMEC Priority Risk Areas Develop and deliver programs to help producers manage legal risk including contracts, leasing, labor, and on-farm & product liability. Create programs and tools to aid producers in water management decisions related to legislation and regulatory policy, water quality and quantity, and changing weather patterns. Equip specialty crop producers to implement and utilize enterprise budgets. Develop and deliver risk management education for beginning, veteran, historically underserved producers, and youth to enhance business sustainability and foster entrepreneurship.

Historic Distribution of ERME Funded Projects by Risk Areas Financial: 36% Market: 20% Human: 17% Production: 17% Legal: 10%

Success Stories

QUESTIONS Ronald Rainey Director Southern Risk Management Education Center rrainey@uaex.edu Website: http://srmec.uark.edu/ Email: srmec@uark.edu