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Evaluating NISA as a Stabilization Program: A Firm-Level Simulation Analysis

Author

Listed:
  • Novak, Frank S.
  • Jeffrey, Scott R.

Abstract

This paper examines alternative risk management strategies in terms of their effectiveness for three representative Alberta farm operations. Stochastic dynamic simulation methods are used to model financial performance for these farms. The results suggest that government programs such as the Net Income Stabilization Account (NISA) program or the Farm Income Disaster Program (FIDP) in Alberta have some benefits in terms of supporting income levels and reducing the chances of farm failure. Neither program is very effective, however, in stabilizing year to year income or cash flow for the farm operations. The performance of NISA relative to alternative risk management programs and strategies such as FIDP, forward contracting or crop insurance, is mixed. In some cases, NISA does not seem to provide benefits beyond those available from other strategies.

Suggested Citation

  • Novak, Frank S. & Jeffrey, Scott R., 1997. "Evaluating NISA as a Stabilization Program: A Firm-Level Simulation Analysis," 11th Congress, University of Calgary, Canada, July 14-19, 1997 346372, International Farm Management Association.
    • Handle: RePEc:ags:ifma97:346372
    DOI: 10.22004/ag.econ.346372
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    File URL: https://ageconsearch.umn.edu/record/346372/files/IFMA11_027.pdf
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    References listed on IDEAS

    as
    1. Bauer, Leonard & Jeffrey, Scott R. & Orlick, Charles C., 1995. "A Comparison of Risk Between Continuous and Fallow Cropping Regimes," Project Report Series 232397, University of Alberta, Department of Resource Economics and Environmental Sociology.
    2. Bauer, Leonard & Jeffrey, Scot R. & Orlick, Charles C., 1995. "A Comparison of Risk Between Continuous and Fallow Cropping Regimes," Project Report Series 206942, University of Alberta, Department of Resource Economics and Environmental Sociology.
    3. Novak, Frank S. & Viney, Bruce, 1995. "Alternative Pricing and Delivery Strategies for Alberta Cattle Feeders," Project Report Series 24044, University of Alberta, Department of Resource Economics and Environmental Sociology.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Agricultural and Food Policy;

    Statistics

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