1. Home
2. Conferences
3. 2010 National Farm Management Conference

Risk-Assessed Marketing II: Helping Producers Manage Crop Production and Marketing Risk in Volatile Production and Marketing Environments

G. Art Barnaby, Jr.

Summary

High volatility of grain prices and costs of production in the last few years have greatly increased risk exposure to grain farmers. Also complicating the risk management landscape for producers are new government programs, including the SURE and ACRE programs. Further, the inter-linkages between these programs and with crop insurance coverage options adds to the complexity associated with farmer’s participation decisions.

To help farmers deal with these complexities and risks, this project uses a case study, with producers making risk management decisions for a typical grain farm during an upcoming marketing year. Participants are given various insurance and grain pricing alternatives and the eligibility requirements of the SURE and ACRE programs. They make marketing and risk management decisions, including crop insurance coverage levels and participation in the ACRE program under both yield and price uncertainty. Participants draw yields randomly from a distribution of yield outcomes. Gains and losses from the sale of grain and collection of insurance, ACRE or SURE payments are calculated. Costs of production are deducted, including premiums for crop insurance and options.

Seven workshops were presented in Kansas, Nebraska and Ohio, targeting wheat and feedgrain producers, with 141 participants. The morning session sets the stage for the case study, discussing the effective use of risk management tools, integrated with SURE, ACRE, and other government programs, and different types and levels of crop insurance. In the afternoon, participants understand through the case study how all of these tools can be integrated into a whole-farm risk management strategy.

Details

---