Farming is Not a Casino

Posted on 03/09/2017 10:22 AM

Step right up to the newest casino game sweeping the nation, farmers and speculators gambling on the weather. That's right, one of the oldest games in the world has now reached epic proportions with the weather bet.

Like "Three Card Monty," the weather game can't be won by the average guy on the street, the speculator or the farmer. The only one who wins the weather game is the house, the brokers and those who know that statistically is the great fade or bet against.

For 100 years, farmers and speculators have been betting on the weather as have the weathermen. If a professional with a degree in predicting the weather is only right 50% of the time, why would we as speculators or farmers think we can do better? The obvious answer is we can't, but we love to try. Predicting any market based on a news or weather is a loser's game that nobody wins.

By nature and their business model, farmers are the biggest gamblers. Farmers take risk the minute they decide to plant -- their gamble begins then. It takes tons of money to produce a farm, bank loans and savings -- all for the gamble that they can turn a profit on an annual basis. Rather than play for chips in a casino, farmers gamble with their own livelihood. They prepare the land and then plant the crops. There are also the hidden costs that come along with farming, which is all about gambling.

Farmers take risk every day; they should not be compounding that risk by trying to be traders or weathermen. Farming is tough enough dealing with the elements and the daily tasks associated with the farm. Adding outside influences should not be one of them. Success is built on doing what you do best, not by adding more risk to the equation.

Each year when you build your marketing plan, all the things that can go wrong and probably will at some point should be accounted for in that plan. Gamblers lose more than they win but those who take everything into consideration from the start put the odds and probabilities in their favor and don't have to gamble.

Life is a game of probabilities and so is farming, put the odds in your favor from the start and prepare for all that can go wrong from the beginning and stay away from predicting the market action.

Keep those stops tight!

The views, opinions and positions expressed by the author are theirs alone and do not necessarily reflect the views, opinions or positions of Pro Farmer.

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