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 200 million acres are now covered by crop insurance, and government insurance subsidies are expected to average over $2 billion annually during the next few years.

Risk management's important role in the farm business requires that research continue to assess farmers' exposure to risk, evaluate various risk management strategies, and analyze government programs that address risk management.

contents

• Risk in agriculture
• Risk management strategies
• Government programs and risk
• Glossary
  
  

feature
Risk Management Tools in Europe: Agricultural Insurance, Futures, and Options. 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 (February 2004).

recommended readings
Risk, Government Programs, and the Environment. 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 (March 2004).

Asymmetric Information in the Market for Yield and Revenue Insurance. Differences in yield and revenue risk help explain farmers' choice of insurance product or coverage level (April 2001).

U. S. Crop Insurance: Premiums, Subsidies, and Participation. Premium discounts in 1999 and 2000 and increases in premium subsidies in 2001 have increased participation in insurance programs, and producers have moved to higher coverage levels (December 2001).

See all recommended readings...

recommended data products
Farm Income Data. Provides farm income forecasts, updated regularly, and farm income estimates, released once a year.

Farm Balance Sheet Data. Includes assets, debt, and equity, where equity equals assets minus debt, and are used to assess wealth in the farm sector.

Commodity Costs and Returns Data. Estimated for major field crop and livestock enterprises each year since 1975.

ERS is continuing research on farmer insurance choices; insurance program design and effectiveness; use of contracting in agriculture; and other related topics.

See all recent research developments...

See all related links...

maps and images gallery
Maps and charts cover yield variability, price variability, and crop insurance participation and performance.

for more information, contact: Robert Dismukes or Monte Vandeveer
web administration: webadmin@ers.usda.gov
page updated: April 15, 2004