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Risk Management Education Release

MAKING THE GRADE IN MONTANA

Jan 11, 2000 - The Brobergs see that their farmís future is tied to an expanding marketplace. They would like to expand and diversify their crops and sell more overseas. And they think that expansion of the crop insurance program administered by USDAís Risk Management Agency would help them do that.

"Iíve bought MPCI (Multiple Peril Crop Insurance) crop insurance and hail protection since we began farming 8 years ago," Broberg said. "Under the terms of the current crop insurance program, wheat provides us the most protection. I would like to grow more barley, but the most coverage I can get for barley is $62 per acre while the maximum wheat coverage is $84. My cost of production is $110 per acre."

However, crop insurance isnít the only risk management tool that the farm uses to protect its price. "By March, Iíve usually forward contracted half my crop with the local elevator," said Broberg. Though not an expert in futures, he usually hedges around 10,000 bushels a year, but doesnít see hedging as a panacea. "It can add other risk dimensions while attempting to alleviate price risk. Producers really need to be students of the market place to be successful." The farm also has storage facilities for a yearís worth of production, but they are only used briefly during harvest.

Broberg, who grew up on a Michigan farm, languished at the Bureau of Indian Affairs before making the life-changing decision to farm. Since making their new lifestyle choice, the Brobergs have encountered not unusual start up trials in finding better farming land and documenting the actual production history so vital to more adequate crop insurance coverage. During the current low price cycle, Broberg is getting a chance to hone his managment skills not only for marketing strategies but for dry land conservation practices.

Broberg takes his land stewardship responsibilities seriously. The no-till seeding practiced on the farm is often used to protect Montanaís fragile landscape. Depending on conditions, there are three methods used to protect fertility and moisture: Conventional summer fallow where no crop is grown and the ground is plowed for weed control; minimum tillage summer fallow where no crop is grown and the ground is tilled lightly or in combination with a herbicide leaving as much crop residue standing as possible; and chemical fallow where no crop is grown and a herbicide spray leaves stubble intact to protect from wind erosion and capture winter snows.

What does the future hold for the Brobergs? "Farming is dynamic. We would like to expand our acreage and grow some more specialty crops like waxy barley, a rice filler used by the Japanese," added Broberg. "But this barley variety, like our legume cover crops, is not covered by crop insurance. So when we grow what we know will be a competitive crop, our risk factor is much higher."

But even with these difficulties, the Brobergs are not only persevering but prevailing -- with an optimistic outlook and willingness to learn new skills. So, after the couple hauls 11,000 bushels of wheat to the elevator this week, thereís that new marketing club sponsored by the General Mills elevator starting up....


Last Modified: 09/08/2010
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