Many dairy producers still hesitant about risk management

Hoard's Dairyman: 

Many dairy producers still hesitant about risk management

Date: 
Fri, 02/10/2012

Cost and complexity cause many to simply take their chances with risk.

You can explain risk management and its potential benefits to milk producers all day long, but if they go away thinking it’s too expensive or too complicated, then they probably won’t try it.

The dairy risk management message has been out there for several years now, but a series of workshops in California last month illustrated that both "expensive" and "complicated" are still big issues for many of them.

The free half-day events were held in four major milk sheds up and down the state, featuring speakers from U.C. Davis and financial experts from private industry. Attendance at each stop was modest (about 15), suggesting that producers’ patience for the topic may have run out or their minds were already made up.

Tiffany LaMendola (pictured), senior director of consulting and risk management for Blimling and Associates in California, gave perhaps the most direct and practical summary we’ve ever heard about the biggest advantage of risk management: “It’s a tool you can use to take disaster off the table.”

Tiffany LaMendola

She stressed the importance of producers deciding ahead of time how much risk they can stand. “Before you go down the risk management path, you have to decide what risk means to you. For some, the number one priority is to not miss out on huge milk price increases. For others, it’s to not go out of business when times are bad,” she said.

LaMendola also did her best to keep things basic and not overwhelm the audience with the complexity of risk management tools, strategies, and jargon. Even so, the workshop once again showed how quickly attention spans can be exceeded, and learning the “language” of risk management may be the biggest hurdle that prevents dairies from taking the plunge.