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Winning the Game: The Dairy Edition

Paul Mahoney

Summary

Winning the Game: The Dairy Edition is a milk price risk management education program. It is a practical approach to teaching price risk management concepts to dairy producers with the goal of smoothing out the bumps in their milk checks.

Using forward pricing tools in marketing milk is in its infancy when compared to the use of forward pricing tools in marketing grain. Therefore the concepts and information can often be overwhelming to many dairy producers. This program was developed to take a simple yet realistic approach to introducing price risk management concepts to dairy producers.

Participants in the program are able to test their marketing skills by making 18 milk-pricing decisions over an eight month time-frame using actual market conditions and prices. Participants receive the results of their pricing decisions over the eight months in the game plus results for seven years of historical data in which their gross returns are calculated. Producers are then able to compare their decisions and results over the seven years to “Celebrity Players” who employ different strategies based on their individual risk tolerances and price targets.

Information and data on price variability and risk, milk price seasonality, developing price targets, and exploration of forward pricing tools for milk are also presented giving producers the background needed to make more informed price risk management decisions.

The workshop provides dairy producers with the knowledge and no-risk real life experience gained in the simulation game to begin using price risk management tools with greater confidence.

Details

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