It has been a long time ago, but in some ways it seems like it was just yesterday I was at the University of Guelph starting out as a college student hoping to learn about agricultural economics at the highest level.

Remembering back, I didn't get off to a good start as on my first economics midterm I recorded a mark of 20%. However, I soon learned that the class average was 18% -- but that didn't make me feel any better. Time went by and I eventually persevered and liked the genre commonly referred to as the dismal science. It eventually led to me getting my master's degree in Agricultural Economics and Business in 1989.

I thought about this recently when I was considering how I often say, "risk management never grows old." In the past few weeks, I have been installing drainage tile on one of my farms where the mistakes of the past have come back to haunt me. What was good risk management then isn't good risk management now. Long story short, I'm retiling 95 acres of land with modern technology and ignoring what has been there for the last 60 or 70 years. Of course, I'm expecting a return on investment.

It just so happens that I farm in southwestern Ontario where moisture is usually too abundant and therefore tile drainage is a necessity. I know that this is different than many farming areas in parts of the United States, as well as Western Canada. However, it is one of the best ways that I can mitigate farming risk where I am. Not only will I expect yield improvement, but I should have fewer wet spots, earlier planting, better root development and less harvest difficulty. It's a risk that I'm always dealing with.

However, as all farmers know, it is not the only risk we have: There are myriad production and marketing risks that affect our bottom line. We manage them all together to maximize profits in an agricultural economic sense. On thinking about this, I dug out my old economics text from Guelph authored by "Lipsey, Sparks and Steiner" -- the authors had first names, but economic professors constantly referred to the textbook as that. I was interested in how these authors looked at the term "risk"; their best line was, "business enterprise is often a risky affair."

Truer words have never been written with regard to economics. Of course, there's a lot more to it and as we all know, with agricultural economics it catches everything. There have been many times where I've written about setting marketing orders at your elevator or processer in the grain market to capture opportunities when they are there.

It's all about mitigating risks and capturing profitable prices, using risk management tools while you are sleeping regarding overnight markets. Just think about it for a little bit, how that has changed since 1977 when I read that economics text. Farming might be a risky affair, but in 2026 we have all kinds of risk management tools, both soft and hard, which can help us manage the volatility with regards to farm revenues.

Tile drainage was there in 1977, just like it was there in 1957 and just like it will be there in 2027. However, these days we have GPS and other modern technology that makes it better. On top of that we have all the new production techniques, the new chemistries, the new fungicides, the new everything that is supposed to smooth the way within our agricultural production process. It's not all fun and games and sunny ways; see artificial intelligence slop and the disinformation of social media. However, I suppose that's just another risk management problem we have on the farm.

Remember my problem with wild carrot I described this past spring and my difficulties with controlling it? (See: " Soybeans, Wild Carrot and the Mirage of $30 Beans," https://www.dtnpf.com/…) Long story short, I'm still having them. I've got a few ideas on how to eliminate it from my farm, but it's been difficult. It has created a risk I never expected and that will likely continue just around the next corner whatever that might be.

The last couple of weeks some of my DTN subscribers and friends from central Indiana received up to 17 inches of rain in a very short period of time. Of course, you could imagine there was different accumulations underneath that but think of the crop destruction. In that case, there's not much you could do but there are risk management tools through U.S. agricultural policy trying to mitigate against disastrous loss. Ditto for Canadian agricultural policy but regrettably it continues to be quite lacking. Governments are also in the business of agricultural risk management.

As I write this, December corn is at $4.85 a bushel. Will it go to $5, or will it be $6 or will it be $7.50 or will it be $3.75 in the next few months? You know my answer, the point being there are risk management strategies to both capture those prices or mitigate the risk whether the market goes one way or the other.

It's not quite the same as tile drainage, business risk management policy from the federal government or fungal diseases in our crops. However, it never ends and when you wake up tomorrow -- there'll be something else you need to manage. On the farm, risk management never grows old.

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Philip Shaw can be reached at philip@philipshaw.ca

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