Risks, Strategies and Resources for Small Scale Producers OCES & OKSBDC Partnership

Risk Management Understanding the nature of risk Selecting appropriate strategies to reduce risk Regardless of size or scale, all agriculture producers and businesses face risks and uncertainty! It can be anything from too much rain, too little rain, equipment breakdown, lack of buyers for produce, etc. Risks can cause loss of income, assets damage; overall will lead the producer not to achieve their goals. The common risks that would affect producers can be categorized into the following prominent areas: Production, marketing, financial, legal and human risks. In managing risk the producer has to evaluate and select the appropriate mix of alternative strategies to reduce risks within the farm business.

Areas of Risk Management Production Marketing Financial Legal Labor/Human

Production Risk Help producers to make a farm plan Challenge Affects both quantity and quality of production Caused by weather, pests, diseases, etc. Mitigation Strategies Enterprise Diversification Season extension Insurance Help producers to make a farm plan Help producers to do costs and returns analysis of various mitigation strategies Farm produce quality or quality levels can be affected by bad weather, pests and diseases, bad seeds, poor soil health, weeds and etc. The occurrence of any of the factors will affect expected income from produce. Mitigation strategies like diversifying the farm enterprise, extending the production season and having a farm insurance can help reduce income variability. Diversification of the enterprise can be used to reduce income variability. Diversification - Growing different crops, combination of crops and livestock, different types of the same crop or can also be achieved through different income sources like having an off-farm job. To mitigate the production risk: We’ll help produce make a farm plan that includes different types of farm products. Help producers do a critical analysis of costs and returns of various mitigation strategies

Marketing Risk We help producers to develop a marketing plan, connect Marketing Challenges Difficulty to access market Fluctuating product demand Limited infrastructure Mitigation Strategies Access to variety of markets/customers Use of contracts Adding value We help producers to develop a marketing plan, connect with alternative market infrastructure Provide producers with the tools, techniques & resources needed to help increase sales The marketing risk can be as a result of NOT being able to access the market (selling a product not sold before, buyer doesn’t know the product, new market, price changes), fluctuating demand or the supporting infrastructure is limited. Market access example: Small scale producers often find it hard to access the wholesale and intermediate markets because of small volume and inconsistency, therefore leaving them the option of selling directly to consumers whatever is available. Mitigation strategy: - Use of production and sales contracts provides benefits such as access to technology, a guaranteed market, and a more stable income.  Forming and participating in marketing cooperatives provides members the opportunity to benefit from volume sales or purchases. Understanding what products customers want to buy Adding value to produce through processing or packaging To mitigate the marketing risk: We help small scale producers develop practical marketing plans for specific target customers; connecting them with alternative market infrastructure. Help producers with the tools, techniques and resources to help increase sales.

Financial Risk Common challenges Cost and availability of financing options i.e Capital and operating Cost of input expenses Record keeping Managing Risk Understand loaning requirements Keeping and using records Undertake finance risk assessment often We help producers to prepare the loan application package We offer business start 101 training workshops/field

Legal Risk Challenges Legal disputes Major sources of disputes Labor issues Market contracts Food safety issues Mitigation Strategies Farm liability and product liability insurance Knowledge and compliance to food laws for inspection, quality and handling Provide producers resources like fact sheets, referrals to experts on specific issues. We assist producers to develop food safety plans to be used at the farm.

Human/Labor Risk Challenges Worker safety Shortage of skilled labor Setting goals Mitigation Strategies Compensation insurance Offer effective training Set clear goals and talk about them We help producers develop farm goals. Help producers develop a training plan for new workers/help. We assist producers to establish farm food safety plans. Human risk involves workers around the farm; their productivity, safety and produce quality. To mitigate the labor risk, it’s is important for producers to plan to have compensation insurance incase of liability claims. Acquiring necessary farming skills and or having proper training plans for unskilled workers will help to promote worker efficiency and minimize safety concerns. Setting clear goals and following them will every worker to be objective. - We help producer develop clear farm goals - Help to develop a training plan for workers - Help producers to establish food safety plans. Compliance with good agricultural practices (GAP) and food safety laws is crucial to reducing legal risk related to consumers.

Working with Local OCES Opportunities Can meet clients at local county offices Client meetings by appointment – 2 hour sessions Follow up client meetings are possible Services Group workshops Confidential client meetings Multiple clients per day Promote County services We are working with local county offices in offering business advising at the local level. The client meetings are planned by appointment with a possibility of follow up client sessions as necessary. The client outreach effort may include hosting group workshops on specific business topics at the local county offices. With the help of the local extension personnel we’re willing to conduct one on one client meetings at the local office location. We suggest to plan for at least 2 client meetings per day. Hopefully, this program will help promote more visibility and stronger relationships at the local level. We work with the county offices in coordinating and setting meeting appointments. Making multiple client appointments per day at the local county office helps us to be efficient on traveling and time management. Each county will advertise and promote the business counseling opportunity (county website, social media, local forums). On average it takes 2 hours for each client meeting on initial appointments. Follow up counseling sessions are arranged after the initial meeting appointment.

Consultation for all Sign up for free, confidential consulting at www.oksbdc.org Register tab Select OSU Extension Services as your center.

James Arati Tel: 405 321 4774 Jarati@okstate.edu Questions James Arati Tel: 405 321 4774 Jarati@okstate.edu