"Farm Credit lenders in 15 states have received words of caution about the potential for excess risks shouldered by their biggest grain customers. ‘The 5,000 to 15,000-acre commercial grain farmer is emerging as a major customer from Arkansas to North Dakota,’ Ross Anderson, senior vice president and chief credit officer for St. Paul-based AgriBank told DTN in an interview last week."The idea is these operations are mostly rented land, so they've got a lot of leverage and are therefore assuming a lot of risk.
Risk on the farm interests me. There have been lots of innovations over the years to reduce risk: vertical integration in poultry, eggs, and pigs; futures; contract farming for popcorn and seed corn, crop insurance, disaster payment programs, production adjustment and marketing quota programs, etc. But farming evolves; the less risk in one area perhaps the more risk in another. The safest type of farming is probably still the well-diversified small farm, not having all your eggs in one basket. But over the last century the US moved away from those farms, a trend which is continuing in this century, as witness the results of planting flexibility.