Mitigate Drought-Related Risk

Four measures agribusinesses can implement to combat dry conditions regardless of location

By Leif Erickson, farm and agribusiness leader, HUB International

Much of North America has been impacted by dry spells that are threatening agribusiness stability.

Currently, 27% of the Midwest is experiencing abnormally dry conditions and 9% of the region is in drought. Last year alone, 28% of Wisconsin counties experienced some level of drought.

Recently, the U.S. government announced measures to help save the Colorado River, imposing regulations on the states that use its water.

The Biden Administration and states along the Colorado River agreed to a plan requiring the three lower basin states to save 13% of Colorado River water by the end of 2026.

The reality is that drought impacts the entire agribusiness, from farms, ranches, and fisheries to those on the food production and distribution side, and consumers are feeling the pinch. Are you ready for water scarcity to become the new normal? Developing a risk mitigation plan should be an essential part of any agribusiness strategy to combat drought, regardless of location.

You may even want to purchase your own moisture evaluation tools to assess soil water levels versus depending on a vendor’s assessments. Spectrum Technologies offers the FieldScout Soil Moisture Meter.

Here are four ways to help minimize drought risk that agribusinesses should harness to conserve water resources and reduce drought risk:

1. Harness education to raise awareness. With the current labor shortage, rising costs and heightened competition from foreign goods, those in agribusiness are already working under pressure and earning less in the process.

Consider partaking in publicprivate partnerships, which were established to foster innovation and provide aid to those impacted by drought.

This includes the Environmental Quality Incentives Program, which aims to provide financial and technical assistance to those in agribusinesses.

Above: Farmers can control the amount of water used and irrigate up to four times a day based on the crops’ needs versus blanketing the entire area with copious amounts of water one time a day.

Producers can get input on irrigation methods, creating additives for soil, improving the qualities of the soil, and identifying additional water conservation methods.

Addressing the current labor shortage should be part of your risk mitigation plan.

By taking advantage of the tools and resources available to help better manage and retain your employees, you will help ensure that your seasonal workers come back, including those using a H2-A visa to work in the United States, saving time and resources on training.

2. Identify risks to combat drought. Consider monitoring water levels and developing an impact assessment to identify drought risk, the latter of which allows farmers and food manufacturers to secure proper insurance and government assistance.

There are an increasing number of tools available to obtain weather outlooks for the short- and long-term, such as the National Weather Service’s Climate Prediction Center, which can assess weather up to two weeks in advance.

You may even want to purchase your own moisture evaluation tools to assess soil water levels versus depending on a vendor’s assessments.

Think about securing parametric insurance for crops that are otherwise uninsurable as well. Parametric coverage insures against an event happening, with payouts based on the magnitude of the weather event, no matter the damage to the crops or buildings.

3. Secure government assistance. Low water supplies, extreme heat and rolling blackouts caused by surging power demand can impact producers who need to properly irrigate their crops.

Federal government assistance programs can help mitigate the financial losses of drought while conservation programs help farmers become more resilient to it.

For example, the U.S. Department of Agriculture’s (USDA’s) Regional Conservation Partnership Program is providing funding to help with climate-smart agriculture and conservation efforts.

Procuring federal crop insurance is essential to mitigate risk, especially for larger operations. In addition, the USDA Risk Management Agency is providing financial assistance to farmers in droughtaffected areas, which is especially helpful for small agribusinesses.

4. Prepare for the worst. While the intensity and probability of drought may be impossible to predict, different methods can reduce its overall impact.

A risk factor assessment, which is a historical study of drought, will help inform decision making. Consider micro-irrigation, which is one way to mitigate water scarcity. Micro-irrigation is a low-volume and low-pressure system for crops that directly applies water and fertilizer to plants or trees, reducing the amount used.

Timing is everything with this strategy. Micro irrigation allows a producer to water crops at different times of the day.

Farmers can control the amount of water used and irrigate up to four times a day based on the crops’ needs versus blanketing the entire area with copious amounts of water one time a day.

Knowing your soil type is the first step in using this system effectively. For example, sandy soil conditions require watering in the evening. Ultimately, using the tools mentioned above can help those in agribusinesses contend with water instability.

About the Author

As a farm and agribusiness leader at HUB International, Leif Erickson works directly with farm and business owners to help structure insurance solutions and risk management programs to protect their operations and mitigate exposure to potential risks.

Leif was born and raised on a small dairy farm in the Blanchardville, Wisconsin, area and has a true passion for helping farmers. This background has helped him develop programs specific to farming and agriculture, including an exclusive Environmental Liability program.