FARMERS in Australia operate in a highly variable environment, and agriculture is considered the most volatile sector in the Australian economy.
In fact, the volatility of the agricultural industry is nearly double that of any other industry in the country. With variability and volatility comes risk.
Unfortunately, in life, there is rarely a reward without taking a degree of risk. In farming, risk is an essential part of generating income. Managing risk is about making business decisions that exchange some level of tolerable risk for some degree of acceptable return. Decisions can be made to decrease risk, but that can often result in lower revenues.
To effectively manage risk in their business, grain producers need to understand both the …