David Mansfield, Agribusiness Extension Agent
Farming is a business built on uncertainty. Each year brings new challenges—weather extremes, changing markets, rising input costs, and unexpected personal events. While no one can predict the future, we can prepare for it by understanding and managing risk in five key areas: production, market, financial, legal, and personal. Production risk includes droughts, pests, or machinery breakdowns that can impact yields. Market risk arises from price fluctuations, supply chain disruptions, or shifts in consumer demand. Financial risk encompasses debt, cash flow, and interest rate exposure, whereas legal risk encompasses contracts, liability, and regulatory compliance. Finally, personal risk encompasses health issues, injuries, or family transitions that can impact the farm’s management and stability.
Planning doesn’t eliminate risk, but it helps mitigate the impact when things don’t go as expected. Steps such as diversifying income sources, maintaining adequate insurance, managing debt levels, and keeping accurate financial records can make the difference between surviving a tough year and being forced to make difficult decisions. Setting aside time each winter to assess your operation in each of these five areas can help identify weak points early. Farmers who adopt a proactive approach—such as reviewing insurance, updating marketing plans, or consulting with lenders—are better prepared to adapt when circumstances change.
Clemson Extension offers tools and resources for developing farm budgets, analyzing cash flow, and evaluating risk management strategies, including crop insurance, USDA programs, and marketing options. Whether you raise cattle, vegetables, or row crops, my goal is to help your farm stay financially healthy and resilient over the long run. Suppose you’d like to review your operation’s risk exposure or learn more about farm financial planning. Contact your local Extension office. In that case, we’re here to help you plan for what’s next.
