Slim profit margins and limited working capital result in a particularly challenging economic environment for many grain producers to navigate. Being a new farmer can add an additional hurdle. A University of Kentucky agricultural economist is offering workshops to help young Kentucky farmers better navigate tight economic times.

Todd Davis, an assistant professor in the UK College of Agriculture, Food and Environment, has hosted risk management workshops throughout Kentucky since 2016. The workshops feature case studies to show producers how they can use risk management tools to preserve their working capital during multiple years of low prices.

“Many young farmers are frustrated that risk management tools do not fully compensate when there are low yields or low prices,” Davis said. “This educational program helps farmers, lenders and extension agents consider the multiple-year benefits of using risk management including profitability improvements, more cash reserves and lower debt levels.”

Muhlenberg County producer Justin Austin has grown row crops since 2012. He attended Davis’ workshop this past winter after Darrell Simpson, his agriculture and natural resources extension agent, told him about it. Prior to attending the workshop, Austin sold all of his grain directly to the elevators at harvest time.

“I felt like I was losing out and was not maximizing my profits,” Austin said. “Being new to grain farming, I was not aware of all the different contracts. He covered all of that and pointed me in the direction of where I want to be.”

Since the workshop, Austin has been able to make use of the marketing practices that he learned. He uses an interactive spreadsheet Davis gave workshop participants to determine his input costs per acre and set a marketing price at which he is comfortable selling grain. He also began to closely watch the grain markets and use forward contracting to lock in grain prices for some of his grain.

“I achieved some of my highest prices for my grain ever,” he said. “I’ve also picked up 235 acres this year. This grain marketing class gave me the tools I needed to be confident that I made the right decision.”

Davis will offer more risk management workshops this winter. Information on those workshops will be available at a later date.