A result of uncertain natural growth processes of crops and livestock. Weather, disease, pests, and other factors affect both the quantity and quality of commodities produced.
Occurs due to the capital-intensive nature of farming and ranching businesses. Volatility of prices, yields and income impact the debt-repayment ability and a business’s cash liquidity. Changing interest rates, credit rules, and the availability of credit are also aspects of financial risk. Financial risk is often intensified by the lack of detailed financial analysis and planning.
Generated by uncertainties surrounding and resulting from government policies and regulations related to tax laws, food safety, labeling and marketing, protected species, water use, animal health and welfare, chemical use, animal waste, other environmental issues such as clean air and water, government commodity and income support programs, and the legal liabilities of a variety of litigious issues faced by farms and ranches.
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