64 / SEEDWORLD.COM OCTOBER 2017 YIELD AND PRICE risk take center stage in most discus- sions surrounding risk in agriculture. While these are obvi- ously important aspects of risk to any farm business, the risks faced by agricultural producers are much broader than prices received for products sold and the risks associated with physical production of outputs. But it’s that same risk that makes it possible to make a profit, according to Lawrence Crane, vice president of program outreach and risk management education for National Crop Insurance Services and a coauthor of an “Introduction to Risk Management.” Today, sources of risk in agriculture are commonly classified into five general areas: production risks, marketing risk, financial risk, human risk and legal risk. Production risk is any activity or event that results in varia- bility in farm output (for example, yield variability from weather, pests, diseases and technology). Marketing risk is any activity or event that results in variabil- ity in prices farmers receive for their products or pay for their inputs (for example, commodity price volatility). Financial risk is any activity or event that threatens the financial health of the farm business (for example, cost and availability of credit, meeting cash flow needs and absorbing short-term financial shocks). Human risk is any activity or event that relates to keeping all of the people involved in the business safe, satisfied and productive (for example, health and well-being, family and busi- ness relationships and employee management). Legal risk is any activity or event with legal implications (for example, contractual agreements, business organization, regu- lations and public policy). The first step in risk management planning is identifying and classifying prospective risks, says Crane. Therefore, when iden- tifying ways to better serve farm customers, it is important to understand how they view the various sources of risk they face. “Knowing your customer base is more important than ever, especially when your customer base includes the complex operations run by today’s large-scale commercial agricultural producers,” explains Michael Gunderson, associate profes- KNOW YOUR CUSTOMERS’ RISKS To help manage risk for your business, it’s important to know the risks facing your customers, according to experts from the Purdue Center for Food and Agricultural Business. Courtney Bir, Nathan Thompson, Nicole Olyn Widmar FARMERS RANK MOST CONCERNING AREAS OF RISK FOR THEIR BUSINESS 36% 26% 19% 12% 7% PRODUCTION RISK FINANCIAL RISK MARKETING RISK HUMAN RISK LEGAL RISK sor and associate director for Purdue’s Center for Food and Agricultural Business. Previous work has been done to assess farmer perceptions of risk areas, but a current evaluation is lacking. Given that producer perceptions of risk are certain to change over time, the 2017 Large Commercial Producer Project aims to provide insights into how farmers perceive the risks they currently face. A choice experiment was conducted as part of a survey eliciting farmer perceptions of general risk areas. Using farmer