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Cattle Risk Management in Iowa for Today´s Producers

Kevin Dhuyvetter

Summary

Increased availability of ethanol byproduct feeds has heightened interest in cattle production among Iowa’s producers. But cow-calf producers and cattle feeders face substantial risks from fluctuations in slaughter and feeder cattle prices as well as input prices. To help improve Iowa producers’ risk management skills, Kansas State University partnered with RMA, Iowa State University, the Iowa Cattlemen’s Association, and the Iowa Farm Bureau to develop and deliver a series of 17 cattle risk management workshops during 2008 with 277 Iowa producers in attendance.

Two distinct workshops were developed and offered, cow-calf and feedlot, both of which used a simulated Iowa case farm. Each workshop provided participants with an opportunity to make the marketing decisions for an Iowa operation with 250 cattle during either the pre-weaning and backgrounding phase for the cowherd, or backgrounding and finishing phase for the feedlot. In each workshop, participants were given the opportunity to select from futures, options on futures contracts, LRP and LGM insurance, and forward cash contracts, in addition to traditional cash sales, when managing their case farm operations.

Laptop computers were used by participants to help evaluate their marketing alternatives and to track their marketing decisions. At the end of each workshop participants were able to compare their case farms’ performance to other case farms at the workshop. Finally, participants also had the chance to see how their strategies would “play out” over 20 years by simulating the results emanating from their decisions. Evaluations indicated significant learning took place during the workshops.

Details

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