Overview
Uncertainty in prices, yields, government policies, and
foreign markets means that risk management plays an important
role in many farm business decisions. A number of risk
management tools are available, including yield and revenue
insurance, futures and options, contracting sales and
purchases, enterprise diversification, debt-level management,
credit availability, and off-farm employment. Government
programs addressing farm risk management have also played
a larger role in U.S. farm policy in recent years. Over 270 million acres are now covered by crop insurance, and government insurance subsidies exceed $4 billion annually.
Features
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.
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.
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