• Risk is Risk, but Loss is the Enemy

    I don’t have to tell you anything you don’t already know…if you’re a business leader in the agricultural (Ag) world, you understandably have a lot on your plate. Many of the business issues that affect fortune 500 companies often have a similar impact on smaller, yet still complex, Ag businesses. Navigating issues, such as production, Human Resources (HR), accounting, strategic planning, and regulations, all take time. At the end of the day, you’re helping feed the world, no big deal right? <Cough> I know that to be otherwise. Whether you’re managing a sow farm, procuring grain for a cooperative, or managing a food processing facility, you have intricate tasks that take up your time…and then some.

    Often times, insurance and risk management come in at the bottom of the “to-do” list. Besides, typically an agent comes out yearly to review costs and coverages. So you’re good to go, right? Well…for the most part, that would be accurate; however, there are many parts of risk management that, if implemented properly, can help you achieve your full potential as a business. Take, for instance, contractor agreements. It really doesn’t have much to do with your insurance mindset…or does it?

    Not too long ago, many agreements were done with a handshake and the said work and risk were transferred to another party. Unfortunately, times have changed and Ag companies can be a target due to the nature of the business. Simply having a third party haul your livestock to another site or to market can open your company to problems, which if arise, could really set you back.

    Further using the example of livestock hauling, maybe today you completely trust your contract carriers and assume they carry the proper insurance coverage to protect themselves from loss. But, playing devil’s advocate here, what happens if the contract carrier in this example pulls out of your facility and misses the next stop sign and hits a school bus? That’s a pretty extreme example, but I think you can see where I’m going with this. It’s easy to see how it wouldn’t take much for someone to figure out the trucking company was hauling your livestock and, just like that, you’re in for some legal nightmares. Sure you could be reading this thinking you have known your trucker for years and there shouldn’t be an issue. Or, maybe you drafted a contract years ago and neatly filed it away for a situation like this. Or, it could be that the powerhouse attorney you met who specializes in our industry took a run at creating a contract to protect you from someone else’s actions causing a loss for you.

    At Holmes Murphy, we’ve seen all of these examples and everything in between. Chances are you have a great partner and something like this will never happen. However, I would challenge you to not take chances. Size of operation doesn’t matter here. Whether you milk 200 head of cattle, feed out 6,000 head of cattle in a feedlot, or own 150,000 sows, be deliberate on protecting your business and your working capital.

    What it boils down to is that risk isn’t the enemy, loss is! Holmes Murphy has resources grounded in both legal and experience in this area to help you shift risk and liability away from your business using contract carrier, contract feeding, and other agreements where necessary. Your job is to produce the best food in the world; our job is to make sure you can continue to do so. Additionally, our team can help review the insurance of your partners to make sure there are no gaps that could potentially pull you into a messy situation. Just reach out to us…I dare you.

    Published on: 03.23.17