Managing Risk in Farming: Concepts, Research, and Analysis
Joy Harwood, Richard Heifner, Keith Coble, Janet Perry, and Agapi Somwaru
Agricultural Economics Report No. (AER774) 136 pp,
March 1999
The risks confronted by grain and cotton farmers are of particular interest, given the changing role of the Government after passage of the 1996 Farm Act. With the shift toward less government intervention in the post-1996 Farm Act environment, a more sophisticated understanding of risk and risk management is important to help producers make better decisions in risky situations and to assist policymakers in assessing the effectiveness of different types of risk protection tools. In response, this report provides a rigorous, yet accessible, description of risk and risk management tools and strategies at the farm level. It also provides never-before-published data on farmers' assessments of the risks they face, their use of alternative risk management strategies, and the changes they would make if faced with financial difficulty. It also compares price risk across crops and time periods, and provides detailed information on yield variability.
Keywords: crop insurance, risk, diversification, futures contracts, leasing, leveraging, liquidity, livestock insurance, marketing contracts, options contracts, production contracts, revenue insurance, vertical integration
In this report ... Chapters are
in Adobe Acrobat PDF format.
- Frontmatter(Abstract, Table of Contents, Summary, Introduction), 44 Kb
- What Is Risk?, 28 Kb
- Types of Risk Most Important to Producers, 39 Kb
- Measuring Price and Yield Risk, 611 Kb
- How Farmers Manage Risk
- Enterprise Diversification, 24 Kb
- Vertical Integration, 19 Kb
- Production Contracts, 23 Kb
- Marketing Contracts, 31 Kb
- Hedging in Futures, 41 Kb
- Futures Options Contracts, 21 Kb
- Maintaining Financial Reserves and Leveraging, 33 Kb
- Liquidity, 17 Kb
- Leasing Inputs and Hiring Custom Work, 17 Kb
- Insuring Crop Yields and Crop Revenues, 278 Kb
- Off-Farm Employment and Other Types of Off-Farm Income, 251 Kb
- Other Ways of Managing Risk, 14 Kb
- Farmers' Reported Use of Risk Management Strategies, 48 Kb
- How Farmers Can ReduceRisk: Examples Using Hedging, Forward Contracting, Crop Insurance, and Revenue Insurance, 354 Kb
- Some Practical Aspects of Farm Risk Management, 68 Kb
- References, 79 Kb
- Glossary, 27 Kb
- Appendix 1: Techniques for Measuring Risk, 37 Kb
- Appendix 2: Analytical Tools for Assessing the Effectiveness of Risk Management Strategies, 83 Kb
- Appendix 3: Examples of Various Types of Crop and Revenue Insurance, 20 Kb
- Entire Report, 2,217 Kb
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Updated date: March 1, 1999
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