Readings
Risks and Risk Management
Strategies
Government Policy and Risk
Management
Federal Crop Insurance
Farm Commodity Programs and Risk
Management
Links
Risks and Risk
Management Strategies
Managing Risk in Farming: Concepts, Research, and
Analysis (March 1999). Comprehensive assessment of risk in
agriculture, risk management strategies available to farmers, and
the effectiveness of various risk management strategies.
Managing Farm Risk: Issues and Strategies 
(February 2000). A compilation of
articles fromAgricultural Outlook magazine covers topics such as
farmers' views of risk, the effectiveness of various risk
management strategies, commodity price variability, and
tax-deferred savings accounts for farmers.
Agricultural Contracting: Trading Autonomy for
Risk Reduction (February 2006). The share of production under
contract grew from 11 percent in 1969 to 39 percent in 2003. For
farm operators, contracts provide benefits from reduced risks, but
also result in loss of managerial control and reduced autonomy. For
the full report, see Agricultural Contracting Update: Contracts in 2003
(January 2006).
Agricultural
Contracting Update, 2005 (April 2008). A growing share of U.S.
farm production is produced and sold under agricultural contracts.
Contracts are far more likely to be used on large farms than on
small ones. Marketing and production contracts covered 41 percent
of the value of U.S. agricultural production in 2005, up from 39
percent in 2003 and 36 percent in 2001.
Agricultural Boom and Bust: Will History Repeat in
the 1990s? (April 1999). Farm incomes, prices,
exports, land values, and interest rates show both similarities and
differences from earlier periods of downturn in the farm
economy.
Risk Management Tools in Europe: Agricultural
Insurance, Futures, and Options
(February 2004). A variety of agricultural insurance products with
different levels of government support are available to farmers in
Europe, reflecting the variety of crops grown and growing
conditions in various countries. Changes in economic and
agricultural policies in Europe over the past 10 to 15 years appear
to have created conditions conductive to the development of futures
and options markets.
Determinants of Endogenous Price Risk in Corn and
Wheat Futures Markets (August 2000). Stocks-to-use ratios,
futures market activity, and other factors affect price variability
for corn and wheat futures contracts.
Forward Contracting of Inputs: A Farm-Level
Analysis (November 1999). Use of output marketing and
production contracts, managerial ability, regional location, farm
size, and specialization in cash grain production are all
correlated with greater forward contracting of inputs among
farmers.
Characteristics and Risk Management Needs of
Limited-Resource and Socially Disadvantaged Farmers (April
1997). This group of farmers tends to specialize more in livestock
production, which is not covered by federally subsidized insurance
and is eligible for few other government supports.
Government Policy and Programs
for Risk Management
"Distributional and Risk Reduction Effects of
Commodity Revenue Program Design," Review of Agricultural
Economics, Vol. 30, No. 3, Fall 2008, pp. 543-53.
Whole-Farm Approaches to a Safety Net (June
2006). "Whole-farm revenue" programs have been proposed as a new
form of income stabilization that would be available to all U.S.
farms. This report looks at the risk management potential for such
programs, which are not linked to production of particular
commodities, and the obstacles to implementing such an
approach.
Why Hasn't Crop Insurance Eliminated Disaster
Assistance? (June 2005). Since the early 1980s, the U.S.
Government has promoted crop insurance as a replacement for
disaster payments as the primary form of risk management aid for
farmers. Despite increased participation in crop insurance, ad hoc
disaster assistance packages have continued to be enacted. This
article discusses the government costs of crop insurance and how
participation varies by type of farm and region.
A Safety Net for Farm Households (October
2000). This report, comparing the benefits of four different farm
assistance programs, finds that distribution of benefits varies
widely across programs.
The Agricultural Risk Protection Act of 2000
(May 2000). Text of the legislation.
Risk, Government Programs, and the Environment
(March 2004). Private and public tools used to manage financial
risk in agriculture may influence farmers' production decisions.
These decisions, in turn, can influence environmental quality. This
technical bulletin summarizes research and provides some
perspective on private and public attempts to cope with financial
risks and their environmental consequences.
The Value of Plant Disease Early Warning Systems:
A Case Study of USDA's Soybean Rust Coordinated Framework
(April 2006). This report examines USDA's system to provide
real-time, county-level forecasts of soybean rust in the United
States. The information provided by Federal, State, industry, and
academic partners is estimated to have increased U.S. soybean
producers' profits by between $11 million and $299 million in 2005,
or between 16 cents and $4.12 per acre depending on assumptions,
especially those concerning the accuracy of rust infection
forecasts.
Federal Crop
Insurance
Managing Risk With Revenue Insurance (May
2007). Crop revenue insurance offers farmers a way to manage
revenue variability that results from yield and price risks.
Commodity-level revenue insurance, particularly for corn, soybeans,
and wheat, has become a major part of the subsidized Federal crop
insurance program. Whole-farm revenue insurance, based on combined
revenue from all commodities produced on a farm, is a more
broad-based approach, but is difficult to administer.
Production and Price Impacts of U.S. Crop
Insurance Programs (December 2001). Subsidized crop
insurance results in relatively small increases in crop plantings,
with the increase concentrated in the Plains states. Although
planted acreage rises for all insured crops, wheat and upland
cotton account for three-fourths of the expansion.
An Empirical Analysis of Acreage Effects of
Participation in the Federal Crop Insurance Program (November
2004). This analysis focuses on corn and soybean production in the
Corn Belt and wheat and barley production in the Upper Great
Plains. The results confirm that increased participation in
insurance programs provokes statistically significant acreage
responses in some cases, though the response is very modest in
every case.
Asymmetric Information in the Market for Yield and
Revenue Insurance (April 2001). Differences in yield and
revenue risk help explain farmers' choice of insurance product or
coverage level.
U.S. Crop Insurance: Premiums, Subsidies and
Participation (December 2001). How have producers
responded to increased premium subsidies, a prominent feature of
the U.S. crop insurance program since the early 1980s, and
expansion of insurance coverage choices? Premium discounts were
added to existing premium subsidies in 1999 and again in 2000, and
the Agricultural Risk Protection Act of 2000 revised subsidy rates
and increased government funding of premium subsidies for
2001-05.
Economic Analysis of the Standard Reinsurance
Agreement
(Fall 2004). The paper outlines provisions of the SRA and analyzes
how the SRA affects returns from underwriting crop insurance.
Private Crop Insurers and the Reinsurance Fund
Allocation Decision (August 2007). This research investigates
the strategic behavior of private crop insurance firms reinsured by
USDA through the Standard Reinsurance Agreement (SRA). A simulation
model of the SRA is used to compare the post-SRA returns of actual
firm allocations to two alternative allocation strategies based on
a aggregate models and a policy-level econometric forecasting
model.
Farm Commodity Programs
and Risk Management
New Market Realities Affect Crop Program
Choices (November 2008). Higher crop prices mean increased
amounts of insurance under the Federal crop insurance program but
reduced likelihood of commodity program payments based on fixed
target prices. The new Average Crop Revenue Election (ACRE) program
offers revenue protection based on recent market prices, but
participating farmers must forgo some benefits of traditional
commodity programs.
New Market Realities Affect Crop Program
Choices (Amber Waves, November 2008). The new ACRE
program offers revenue protection based on recent market prices,
but participating farmers must forgo some benefits of traditional
commodity programs.
Forecasting the Counter-Cyclical Payment Rate for
U.S. Corn: An Application of the Futures Price Forecasting
Model (January 2005). This report provides background
information on the model for corn, its data requirements, the
forecast procedure, and forecast results for crop years 2003/04 and
2004/05. The Excel spreadsheet models for corn, soybeans, and wheat
are available at Season-Average Price Forecasts.
Valuing Counter-Cyclical Payments: Implications
for Producer Risk Management and Program Administration
(February 2007). This study illustrates an improved method for
estimating counter-cyclical payment rates by accounting for the
variability in market price forecast errors. Forecasters and
producers can use the model to calculate the probability of having
to repay advanced counter-cyclical payments.
Links
Federal Agencies
USDA Risk
Management Agency. Extensive information on crop and revenue
insurance programs, and educational materials on risk
management.
USDA Farm Service Agency. Information on
emergency assistance and loan deficiency payment programs for
farmers.
USDA, National Agricultural Library, National
Agricultural Library Digital Repository (NALDR). Online
browsing of historical ERS Agricultural Economic Reports and
Agriculture Information Bulletins.
Weekly Weather and Crop Bulletin. Reports on
current growing conditions and crop progress from USDA and the
National Oceanic and Atmospheric Administration (NOAA).
Commodity Futures
Trading Commission. Information on futures markets and their
regulation; educational materials and links to commodity exchange
websites.
University Sources
Ag Risk
Education Library. Online source of educational and research
materials related to risk management from the University of
Minnesota Extension Service.
Northeast
Center for Risk Management Education. Risk management education
information and contacts for States in the Northeast region.
North Central
Risk Management Education Center. Risk management educational
materials and university contacts for States in the North Central
region.
Pacific
Northwest Risk Management Education Project. Risk management
educational materials and university contacts for States in the
Pacific Northwest region.
Southeast Risk Management Education. Risk
management educational materials and university contacts for States
in the Southeast region.
Western Risk Management Library. Risk
management educational materials and university contacts for States
in the Western region.
Farmdoc. Risk management information provided
through the University of Illinois at Urbana-Champaign.
Ag Manager, Crops: Insurance and Risk.
Educational materials from the Department of Agricultural Economics
at Kansas State University.
Taking Charge of Risk. Information on a risk
management course offered by the Michigan State University
Extension Service.
Crop Marketing and Risk Management. Risk
management information provided through North Dakota State
University Extension Service.
Financial and Risk Management Assistance.
Educational materials from the Department of Agricultural Economics
at Texas A&M University.
Risk Management Programs in Wisconsin. Risk
management information provided through the University of Wisconsin
Extension Service.
Iowa State University Extension Service. Links
to bulletins on marketing and management topics, including crop
insurance.