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Quantifying Sources of Dairy Farm Business Risk and Implications for Risk Management Strategies

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  • Chang, Hung-Hao
  • Schmit, Todd M.
  • Boisvert, Richard N.
  • Tauer, Loren W.

Abstract

Major sources of variability in net farm income on New York dairy farms over the past 10 years are identified using variance decomposition methods. The most important source of income variability is the fluctuation in milk prices, followed closely by year-to-year variation in the quantity of purchased feeds. The degree of success in engaging in activities that increase diversification and lead to variance reductions in farm income are higher for older farmers and for those that utilize milking parlors, use recombinant bovine somatotropin, have greater assets per cow, and have engaged in activities to earn income from off-farm sources.

Suggested Citation

  • Chang, Hung-Hao & Schmit, Todd M. & Boisvert, Richard N. & Tauer, Loren W., 2007. "Quantifying Sources of Dairy Farm Business Risk and Implications for Risk Management Strategies," Working Papers 127012, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:127012
    DOI: 10.22004/ag.econ.127012
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    File URL: https://ageconsearch.umn.edu/record/127012/files/Cornell_Dyson_wp0711.pdf
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    References listed on IDEAS

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    1. Knoblauch, Wayne A. & Putnam, Linda D., 2005. "Dairy Farm Business Summary, New York Dairy Farm Renters, 2004," EB Series 122045, Cornell University, Department of Applied Economics and Management.
    2. Knoblauch, Wayne A. & Putnam, Linda D. & Karszes, Jason, 2005. "Business Summary New York State 2004," Research Bulletins 122088, Cornell University, Department of Applied Economics and Management.
    3. Dismukes, Robert & Durst, Ron L., 2006. "Whole-Farm Approaches to a Safety Net," Economic Information Bulletin 33893, United States Department of Agriculture, Economic Research Service.
    4. Boisvert, Richard N. & McCarl, Bruce, 1990. "Agricultural Risk Modeling Using Mathematical Programming," Research Bulletins 183294, Cornell University, Department of Applied Economics and Management.
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    1. El Benni, Nadja & Finger, Robert, 2014. "Where is the risk? Price, yield and cost risk in Swiss crop production," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 95(03), pages 299-326, September.
    2. Schmit, Todd M. & Chang, Hung-Hao & Boisvert, Richard N. & Tauer, Loren W., 2007. "Quantifying the Contributions to Dairy Farm Business Risk: Implications for Producer's Risk Management Strategies," EB Series 121879, Cornell University, Department of Applied Economics and Management.

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