What are the risks in milk production?

The sources of risk on a cattle farm are numerous, especially at the production and technical level, and the success of production often depends on the way risks are managed.

Krave - © Pixabay

Choice of breed and types of production

By myself by race choice and by the farm’s production orientation – meat and/or milk, we focused the farm on one specific type of risk. The organization of the farm, the way of keeping livestock, the way i usage structure arable land for the production of own fodder are a new source of risk.

When keeping livestock, as live material as well there are health risksreproductions and increments that can distance us from favorable degree of utilization production potential of the breed.

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It is similar in the production of fodder. Bad weather conditions, inadequate preparation of sowing and care of forage crops, as well as the appearance of diseases and pests are the main production risks. You can’t do it on time directly affectbut only weather forecasts and a half are followed average weather conditions chooses the type and assortment of some fodder crop, but the farmer risks other production sources can act with technical procedures.

Prices and market risks

Prices and market risks are another category of risk sources in cattle breeding. In agriculture, most of the input prices, as well as finished products, are predetermined. That’s how it’s created a new form of risk for owners of cattle farms – market risk. On the other side, govedari they can turn the market to their advantage, producing indigenous cattle products and value-added products to exploit the market to their advantage.

Farma goveda - © Pixabay

Financial risks

Financial risks they are especially important when borrowing from the farm. The increase in the interest rate, the possibility of postponement or replacement of loans, as well as the limited availability of loans directly affect the financial risk.

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The financial risk of cattle production is something that our producers are already aware of used to it happening to them, but they are not inclined to use techniques (tools) to reduce or mitigate its consequences. Monitoring financial reports on farm operations, as well as analyzing financial indicators, is not something ours are inclined to do owners of cattle farms farm, but these tools will increasingly have to be used to manage the cattle farm and the risks of its business.

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Regular consultation of financial reports and indicators for operational (short-term) and strategic (long-term) decisions will have to be management style both on large and small cattle farms.

Tax lawsregulations for animal husbandry, use of pesticides and animal medicines, rules for waste disposal, as well as the level of prices or income support are examples of state decisions that can have a big impact to the operation of the cattle farm.

Legal risks

Legal risk refers to the contracting of individual farm business activities which should be of high quality so that their impact on the final success of the business is as small as possible. It is important legally cover contracting use of rented land, machines and workers. In the same way, the obligations of services for the farm, as well as the placement of farm production, should be regulated.

Harvested field - © Pixabay

Personal risk

Personal risk or the risk of human resources of the household is the last type of risk. It refers to the security issues of the farm itself, which are covered by crop and livestock insurance, as well as facilities and equipment. From the point of view of human resources, this also includes life insurance for farm owners and household members who are used as labor on the farm.

Risk management contains a number of parameters. It is necessary analyze sources of risk and uncertainty in business. Define your views as a farm owner on the abilities and possibilities, not to avoid risk, but to operate efficiently in conditions of risk.

Sometimes risks were avoided as much as possible or the probability of their occurrence significantly reduced. Today, farm owners are being educated on how to live with risk.

Risk management strategies and techniques

For the production risk of the cattle farm basic strategy is the management of the production potential of the basic herd, which means greater utilization production race possibilitiesapproaching the norms of modern production in terms of calving coefficient, length of lactation, growth of calves, and milk production per head.

Sometimes we cannot influence the health of animals, so it is used as a technique to reduce or eliminate risks animal insurance. Likewise, crop insurance tries to eliminate the impact of weather events on ensuring enough fodder for the farm.

As a production risk management strategy, multiple production goals of the farm are proposed, which means combining meat and dairy components, but also additional processing of the basic product on the farm.

Source: Agricultural expert and advisory services

Author: B.Sc. Eng. of Agriculture Neđeljko Pipović PSSS Knjaževac

Source: Agromedia by www.agromedia.rs.

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