As commodity prices transitioned lower from the record highs of 2012-13, farmers, ANR agents, and lenders have placed a greater emphasis on learning and using risk management tools. The swift decline in corn and soybean futures price from August 2014 into harvest stimulated demand for a grain marketing education course targeted towards young and beginning farmers.
The UK Grain Marketing Series was delivered via Skype Business to farmers in Butler and Simpson Counties, Kentucky. Five one-hour presentations were delivered from November 2015 to March 2016. Topics presented were: an overview of grain marketing and risk management; using futures and options to manage risk; understanding the cash market and tools to manage risk; past performance of alternative risk management strategies; and understanding crop insurance as a foundation for developing a risk management plan for 2016. Participants also played the on-line grain risk management game The Commodity Challenge to apply risk concepts without impacting their farm's cash flow or profitability.
The objective of this course was to help farmers develop a pre-harvest risk management plan. This risk plan uses RP crop insurance as the foundation of the risk plan. The price risk tools that farmers used in the commodity challenge was cash forward contracts, hedging with commodity futures, and using put options to place a price floor on revenue. Cash market data for Western Kentucky was used to demonstrate the effectiveness of each risk tool and to help farmers understand under what conditions each tool may be effective in managing risk.
|Conference||2017 Extension Risk Management Education National Conference|