Weather extremes, volatile market prices and logistical snags have all chipped into a challenging scenario for cattle producers.
Drought has shortened forage crops in western states. Surging corn prices have strained Midwestern feed budgets. Factors like these that strain cattle feed availability and ramp up costs are renewing interest among some cattle producers seeking new or different feed supplies to sustain their herds. If you are weighing that decision, consider both overall business continuity and mitigating any potential new risks.
Think about what you feed, how much of it you keep on hand and the price you pay for it in making sure you’ve got the right business continuity and risk management strategies in place, according to Nationwide Senior Consultant Erin Cumings. In addition to her role at Nationwide, Cumings raises cattle on her family’s central Iowa farm.
Adequate feed a ‘choke point’ for cattle producers
Maintaining adequate feed supplies is among the top priorities for any cattle producer, whether you’re a cow/calf operator, backgrounder or feeder. That puts managing the potential risk of losing those supplies at or near the top of every progressive manager’s list.
“Feed availability is a potential choke point that can disrupt business continuity for livestock. You have to manage that risk,” Cumings said. “There are a number of causes. Some are tied to a covered loss, but others aren’t. Your Nationwide Farm Certified agent can help you determine which uncovered losses you’re most likely to encounter.”
Quantity is a big consideration
How much feed is kept on the farm is one adjustment many producers make when supplies are tight and prices are high. Often, such a step requires a change in how feed or ration ingredients are transported to your farm. Think about things like insurance coverage during feed transport to shore up any coverage gaps.
“If you change how you hold cattle feed inventory, you need to make sure you have updated your policy to cover feed on hand, whether it’s grain or hay. If you can’t get grain, for example, and have to feed distiller’s grains instead, you need to make sure you’re covered for getting it to your farm,” Cumings said. “If you are trucking hay yourself, you likely need cargo coverage that covers the perils you might face. That’s true whether you own the hay or not.”
Know your perils
Cumings recommends conducting an annual or semi-annual review with your agent to make sure you have adequate insurance coverage for your feed supplies. That’s important whether you’re sticking to past plans or securing new or different feedstocks. That plan should also account for any potential unforeseen disruptions in supply like grain spoilage or forage fire losses. Some losses are covered by insurance, while others aren’t. Matching your insurance policy and coverage level to the feed type and volume is key to managing through any potential disruption.
“Link your coverage to business planning and continuity, especially if you’re holding commodities differently, whether it’s grain or hay,” Cumings said. “A good business manager can manage these risks, even if you’re seeking a new feed supply or are holding a different amount of feed on the farm.”
If you’re considering changing your livestock feeding strategy, talk to your Nationwide Farm Certified agent to make sure you’re covered.