Risk management is always part of agriculture, but in today’s volatile markets, the fundamentals matter as much as ever, regardless of operation size. Understanding costs, knowing who you are selling to, and being honest about what a balance sheet can withstand are decisions every producer faces, whether the operation is large or small.
Those principles were part of a recent conversation with Fallon Savage, senior vice president of corporate credit with Farm Credit Services of America. Savage works with producers and agribusinesses on aligning financial decisions with long-term sustainability, focusing on how risk management fits into the overall health of an operation.
Savage says one of the most common misconceptions around risk management is narrowing it to market positions alone. Instead, she emphasizes starting with a clear understanding of a producer’s marketing plan, cost of production, and exposure to operational risk. Knowing those fundamentals helps producers make disciplined decisions when markets are volatile and avoid strategies their balance sheet cannot support.
That approach applies across commodities and across scales. Whether it is grain, livestock, or dairy, Savage says the goal is not to eliminate risk, but to understand it well enough to manage it intentionally and consistently.
When evaluating specific tools, Savage says producers need to consider how different strategies interact with their operating model and financial capacity. Market movements of just a few dollars can have meaningful impacts, making it important to understand how margin protection, insurance products, or hedging strategies perform under stress. Matching those tools to the realities of an operation helps protect margins and preserve long-term stability.
Savage says the most successful risk management plans are written down, followed closely, and revisited as conditions change. In an environment marked by rapid price swings and uncertainty, discipline and clarity remain critical regardless of the size of the operation.
