Ep. 343: Why farming is a risky business
Guest: Kristjan Hebert, Managing Partner of Hebert Grain Ventures
Farming is a risky business.
According to Kristjan Hebert, reducing that risk comes down to numbers. “You used to be able to blame financial losses on the weather,” he says, “You can’t do that anymore.”
He uses an 8,000-acre (32 square kilometre) farm as an example. To him, that’s one seeder, two combines, one sprayer and three full-time workers plus the owner.
“The cost to operate that farm runs about $400 an acre, he says. It means the farmer needs to have access about $3.2 million in cash and working capital to operate the farm from January through to harvest. The farmer also needed another $350 an acre in capital investment.
Knowing the farm’s costs exactly allows farmers and their lenders to make informed decisions and run sophisticated enterprises.
“Central to risk management,” he says, “Is the adoption of technology in farming.”
Hebert said technology today allows much more sophisticated data collection, allowing farmers to produce budget projections while allowing for unpredictable weather. Through the use of proper risk management programs, “you can get your variants to be a lot smaller” on the downside.
We invited Kristjan Hebert for a Conversation That Matters episode about the business of farming in Canada.
