Farming comes with a wide range of risks by its very nature. Whether it’s the rising cost of feed and fuel, a disease outbreak, or workplace safety, Canadian poultry farmers face a unique set of risks that require careful planning and management. Effective risk management is no longer an option — it’s a strategic necessity.
But how do you develop a comprehensive plan to manage these risks?
How to develop a risk management plan
Creating an effective risk management plan involves understanding the risks facing your farm and how you can reduce or transfer them. While this plan won’t eliminate the potential of risk, it can help you reduce the impact on your operation and maintain its viability. It can also provide you with more peace of mind.
Developing a risk management plan involves:
- Identifying the risks on your farm
- Assessing and prioritizing these risks
- Creating a plan to mitigate them
- Taking action by assigning roles and developing a timeline
- Reviewing your plan annually
Identify your risks
No two poultry operations are the same — and the risks you face are as unique as your farm. Identifying these specific risks is the first step of creating an effective risk management plan. You can’t prepare for risks you don’t know, and unidentified risks could have the largest impact on your operation and balance sheet.
When you create your risk management plan, consider what-if scenarios that relate to:
Production
- Disease outbreaks
- Power outages
People
- Workplace safety
- Labour
Finances
- Debt
- Cashflow
Markets
- Inflation
- Interest rates
Geopolitical events
- Supply chain disruptions
- Trade disputes
Prioritize your risks
After you pinpoint the unique risks facing your operation, the next step is to figure out which risks are the most significant. It is important to consider the likelihood of each risk, the impact on your operation, and how prepared you are to mitigate them. This allows you to prioritize which risks to handle first — and avoids the overwhelming prospect of having to deal with them all at once.
Create a plan and take action
After you have prioritized each of the risks facing your poultry operation, it is critical to develop a plan to address these risks. Taking a proactive approach to risk management by developing a plan that combines risk reduction and risk transfer can help protect your farm.
There are a wide range of best practices that can help reduce risks. For example, investing in backup power solutions and preventative maintenance can help reduce the risk of a power outage on your poultry farm. Implementing a biosecurity plan can help reduce the risk of disease outbreaks.
Identifying the right insurance coverage for your operation can help transfer risks away from your poultry farm. Enrolling in government programs such as AgriStability can also help you transfer these risks. This program is designed to protect Canadian producers against large declines in farming income by providing a payment when your margins drop too low.
Identifying the right solutions to reduce and transfer risks is a complex process. An advisor has the experience to ask the right questions and can provide the guidance you need to succeed as you put your risk management plan into action.
What are the benefits of a risk management plan?
A comprehensive approach to risk management has a variety of positive impacts on a farm — including financial and business impacts. A risk management plan can support higher profits and lower debt. It also allows your business to make informed decisions and pivot quickly.
But it’s not just about money. Having a plan can also have significant positive personal impacts by reducing anxiety and stress. According to a 2020 report from Farm Management Canada, 62 percent of Canadian farmers report mid-stress levels and 14 percent said they had high levels of stress, caused by financial pressures, workload pressures, and industry unpredictability.
Planning for uncertainty can help alleviate these concerns. The study found that 88 percent of farmers who follow a written business plan say it has contributed to their peace of mind. A risk management plan can help you prepare for the unexpected and contribute to your farm’s financial health as well as your own health.
For more information about developing a comprehensive risk management plan for your poultry operation, contact MNP’s Mathieu Lipari at 613.691.4204 or mathieu.lipari@mnp.ca
