COVID-19 is causing us to experience events that have always been possible, just not yet observed. For farmers, these events may have a big negative financial impact, or they may not. The impact on each individual farm has to do with how that individual farm has prepared for rare financially devastating events. Preparing for unseen events represents a logical approach. We call this approach stress testing. Just because you have not seen an event, it does not mean it does not exist. Or said another way, absence of evidence is not evidence of absence. In this article, we discuss how to consider and plan for rare events.
Why should one stress test their farm for events that have never occurred? The answer lies in your individual goals and objectives. If your goal is to farm next year, then you must develop a plan to overcome financially devastating events (i.e. combinations of low prices and/or yields). How much revenue can you lose before going out of business? Preparedness is crucial for survival.