Teaching farmers how to implement risk management practices using futures and options is generally easier on paper than in real life. Farmers can be quick studies on the mechanics of hedging, but implementing these strategies in real markets with real implications to the farming operation is another level few reach. At one extreme, less than 1 percent of all dairy producers use(d) hedging strategies to manage price risk in their operations. Farmers have demonstrated a need to apply concepts to real-world applications before using those concepts in their own farming operations. FACTSim is a financial and commodity risk management simulator that uses real-time data to give farmers the opportunity to apply concepts with real-time data without the costs associated with mistakes. FACTSim has been used in educational settings in the southeast for the last several years and producers have used experiences gained from FACTSim to apply in the own farming operations. FACTSim takes farmers to the step beyond learning the concepts to putting together a plan of action with marketing goals that services farm debt needs and profit strategies that realize the farm’s goals. Crop and livestock producers in the Southeast have used FACTSim to learn the mechanics of hedging with futures and options and the implications of implementing those strategies in their operations. The result of this experience is more producers using hedging strategies to manage the price risk in their operations.
|Conference||2011 Extension Risk Management Education National Conference|
|Presentation Type||30-Minute Concurrent|