4 Common Risks Your Missouri Farm May Face (and How to Mitigate Them)

While Missouri farms set records for profits in 2022, from ongoing drought to inflation raising the costs of farming, we’ve also seen our fair share of challenges.

As your trusted agricultural lender, we know that effective financial management—alongside some common-sense practices—can go a long way to mitigate known and unknown risks your farm will face over the years. In this post, we’re focusing on four of the most common threats and challenges that arise in the business of agriculture, and simple things you can do to prevent, prepare, and minimize their impact. Keep reading to learn more!

Weather and Natural Disasters

Perhaps the most Missouri-specific risk, our sometimes erratic weather patterns and common natural disasters can make our region especially risky for farmers. Often referred to as “acts of God,” these events are important to prepare for to ensure that one bad year doesn’t put your entire farming operation into jeopardy. Risks to watch out for include:

• Earthquakes. Missouri is on a major faultline and earthquakes with magnitudes of up to 4.6 have occurred four times in central Missouri to southeastern Missouri in the last 35 years. Earthquakes commonly damage buildings and storage structures, as well as equipment housed within.
• Severe weather: Storms, tornadoes, and flooding. According to Pat Guinan, State Climatologist for Commercial Agriculture at the University of Missouri, “The clash of air masses [that occurs] over Missouri during spring, especially in April and May,” can commonly lead to severe weather phenomena, including thunderstorms, tornadoes, and floods. In fact, Missouri has over 30 tornadoes each year on average.
• Extreme heat, wildfires, and drought. These natural disasters are becoming increasingly common in Missouri and affect crops as well as livestock, and can even put your farm infrastructure at risk. In the past decade, drought has become more frequent and severe. 

How to Mitigate the Effects of Natural Disasters:

• Get crop insurance. Speak with your banking partner at BTC to learn more about our PRF Crop Insurance options. When disaster does strike, check out the USDA Risk Management Agency’s guide, Natural Disasters and Crop Insurance, for basic advice to be sure you get the most out of your crop insurance and don’t make costly mistakes.
• Keep livestock vaccines up to date. Injuries and stress during natural disasters can leave your livestock susceptible to disease. Get ahead of this by ensuring your livestock are healthy and immunized against common contagious diseases.
• Keep valuable equipment, feed, and grain, as well as hazardous materials, elevated—never at the lowest point on your farm—to keep safe from flood waters.
• Keep reserves of 2-4 weeks for fuel, feed, and other supplies on hand at all times.
• Investigate irrigation options. As droughts become more frequent, you may need to consider installing irrigation structures to keep your crops watered and less-susceptible to disease during periods of little rain.
• Know where to find assistance. See if you qualify for the USDA’s Disaster Recovery Assistance. Speak to your local University of Missouri Extension Office for additional advice and aid programs.

Pests and Diseases

Natural disasters and weather events, from excess rain to drought, can leave crops and livestock more vulnerable to disease. And the evolution of pesticide resistance continues to blight farmers—as Chemistry World points out, “weeds and other plant pests can no longer be controlled by chemicals as easily as they [once] could.” A massive outbreak of a disease or pest can wipe out an entire year’s profits—but even everyday increases in expenditures can cause big impacts to your bottom line.

How to Mitigate the Effects of Pests and Diseases:

• Minimize reliance on chemical inputs. Overutilizing single applications and pesticide mixtures can expediate weed and disease resistance, in addition to costing you more in wasted products. Instead, the EPA recommends utilizing crop rotation, reducing crop stubble, and be conscientious when timing chemical applications.
• Keep your livestock up to date on vaccines and medical procedures. Vaccinations are the single most effective way to prevent the spread of common communicable diseases. 
• Give your livestock good living conditions. Poor conditions can cause bacterial, viral, and fungal diseases to spread rapidly. Keep your livestock’s living quarters clean and dry. Give them regular access to fresh air, clean water, and room to roam. Improve climate control conditions and keep air circulating. Never reuse feed.
• Use crop insurance to protect yourself from catastrophic occurrences. Learn more about the benefits of crop & PRF insurance.

Economic and Policy Impacts

In the wake of the COVID-19 Pandemic, we’ve experienced significant economic shifts, from supply chain disruptions and rising fuel and operating costs to fluctuations in demand. Though government policies can have huge financial benefit to farmers, regulations, the phasing out of subsidies, and federal interest-rate increases can have negative financial consequences, too.

The USDA predicts farm profits will decrease in the coming year—by nearly 16% over 2022 profits. When facing a discouraging economic prediction, minimizing the effects of an impending downturn by reducing costs and shielding your farm from the largest impacts can help you weather tough financial times and make your operation more profitable in the long run.

How to Mitigate the Economic and Policy Impacts:

• Wait to sell if prices are low. Speak to your extension office to see if temporarily holding onto your product could make more sense than selling when prices are down.
• Diversify your farm. Putting all your eggs in one basket can have catastrophic effects if the market falls out for that particular product. Diversification is key to building a resilient farm enterprise. 
• Keep sufficient cash reserves on hand. Utilize products like farm operating loans and lines of credit instead of wiping out all your cash reserves for regular or large one-time expenses. These cash reserves can keep your farm afloat for an extended period in the face of lean economic conditions, can provide returns when interest rates are high, and can also serve as collateral to help you obtain financing at the best possible rates.
• Work with a trusted ag lender. Having a close relationship with a knowledgeable ag lender can help you secure the most affordable financing, even during times of high borrowing interest rates.

Health and Wellbeing of the Farmer

Lastly, let’s take a minute to talk about the lynchpin of your farm: You. Farming is a busy life, without a lot of downtime for reflecting on health and keeping up with routine medical care. Farming can also be dangerous. In fact, according to the University of Missouri in their article Farming: The most dangerous job in the U.S., “each year, more people die while farming than while serving as police officers, firefighters, or other emergency responders.” It’s important to not only minimize your risk, but also consider contingency plans for your farm, should you be unable to maintain your daily duties.

How to Mitigate Farmer Health Risks:

• Get annual checkups. Schedule them for periods when you have the most available time—not during planting or harvesting seasons. Take your doctor’s advice seriously and follow all recommendations. Remember that the continued success of your farm could depend on it.
• Don’t wait to see a doctor. If you’re not feeling well, don’t try to power through it. Even if it’s not at an opportune moment, delaying healthcare can have grave consequences. Stop what you’re doing and seek professional care to avoid costly long-term health implications.
• Practice all safety precautions. From large animals to heavy machinery, farmers encounter any number of risks each day. When risks become part of the fabric of our lives, sometimes we fail to take them seriously. Accidents pose a huge danger to farmers. Speak to your extension office, review the CDC’s tips for Agricultural Safety, and never get too comfortable—use your best judgment with all your farm activities.
• Create a contingency plan (and a succession plan). Even with precautions, illness and injuries can still happen. Take the time to work with your family and workers to create a practical contingency plan should you be unable to perform your duties. Create plans for both short and long term situations, selecting which family members or staff will be in charge of which aspects of your operations. Revise your plan annually and be sure everyone involved is aware of your plan and wishes.

Work with a Trusted Banking Partner

When you have a relationship with a knowledgeable and experienced ag lender, not only do you benefit from their financial expertise, but you also gain access to a world of resources to help you navigate and prepare for tough times. 

We can help you prepare for the unknown future: from farm Succession Planning and Crop Insurance to creating short-term investment strategies like CDARS to build your cash reserves, we offer a wide range of products and services to make sure you’re ready for whatever trials your farm may face. We can also help you recover from those challenges: with flexible lending options from Farm Revolving Credit Lines to Farm Equipment Financing & Tractor Loans, we can help you replace damaged machinery and infrastructure, cover gaps in cash flow, and get you back on your feet.

Call of visit one of our BTC Bank Locations today to see how we can help your Missouri (or Iowa!) farm manage risks and create paths for a resilient and long-lasting agricultural enterprise.