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Federal Risk Management Tools for Agricultural Producers: An Overview

Author

Listed:
  • Motamed, Mesbah
  • Hungerford, Ashley
  • Rosch, Stephanie
  • O’Donoghue, Erik
  • MacLachlan, Matthew
  • Astill, Gregory
  • Cessna, Jerry
  • Joseph Cooper

Abstract

This report describes the current landscape of Federal risk management policies, including the Agricultural Act of 2014, and analyzes the outcomes and interactions of these programs. Despite their common objective of risk reduction, Federal programs differ in their payment mechanisms and their impacts on producer revenue, and uptake has varied significantly across programs and crops. Area-loss insurance programs, such as the Stacked Income Protection Plan and Supplemental Coverage Option, received low enrollments, while applications to the Noninsured Crop Disaster Assistance Program witnessed sizable growth. Differences in program enrollment and program provisions across crops led the bulk of Agriculture Risk Coverage payments to go to producers with corn and soybean base acres, while most Price Loss Coverage payments went to rice, peanuts, and wheat base acres. Half of dairy producers enrolled in the Margin Protection Program for Dairy, but large national margins led to few payments in 2015 and 2016. In contrast, changes in program design led the Livestock Gross Margin for Dairy program to make significantly more indemnity payments per policy. Outside of dairy, the Livestock Forage Program remains the largest livestock support program, though outlays have fallen in recent years.

Suggested Citation

  • Motamed, Mesbah & Hungerford, Ashley & Rosch, Stephanie & O’Donoghue, Erik & MacLachlan, Matthew & Astill, Gregory & Cessna, Jerry & Joseph Cooper, 2018. "Federal Risk Management Tools for Agricultural Producers: An Overview," Economic Research Report 276229, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersrr:276229
    DOI: 10.22004/ag.econ.276229
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    References listed on IDEAS

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    1. Keith H. Coble & Robert Dismukes, 2008. "Distributional and Risk Reduction Effects of Commodity Revenue Program Design," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 543-553.
    2. O'Donoghue, Erik J. & Hungerford, Ashley E. & Cooper, Joseph C. & Worth, Thomas & Ash, Mark, 2016. "The 2014 Farm Act Agriculture Risk Coverage, Price Loss Coverage, and Supplemental Coverage Option Programs' Effects on Crop Revenue," Economic Research Report 262201, United States Department of Agriculture, Economic Research Service.
    3. Hungerford, Ashley & O'Donoghue, Erik, 2016. "Federal Crop Insurance Options for Upland Cotton Farmers and Their Revenue Effects," Economic Research Report 249774, United States Department of Agriculture, Economic Research Service.
    4. Cooper, Joseph & Delbecq, Benoît, 2014. "A multi-region approach to assessing fiscal and farm level consequences of government support for farm risk management," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 3(3), pages 1-23, December.
    5. Hungerford, Ashley & Astill, Gregory & Effland, Anne, 2017. "Changes to the Noninsured Crop Disaster Assistance Program Under the Agricultural Act of 2014: Their Potential Risk Reduction Impacts," Economic Information Bulletin 262132, United States Department of Agriculture, Economic Research Service.
    6. Mark, Tyler B. & Burdine, Kenneth H. & Cessna, Jerry & Dohlman, Erik, 2016. "The Effects of the Margin Protection Program for Dairy Producers," Economic Research Report 262192, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. Martinez, Steve W. & Park, Timothy, 2021. "Marketing Practices and Financial Performance of Local Food Producers: A Comparison of Beginning and Experienced Farmers," USDA Miscellaneous 313069, United States Department of Agriculture.
    2. Sungkwol Park & Barry K. Goodwin & Xiaoyong Zheng & Roderick M. Rejesus, 2020. "Contract elements, growing conditions, and anomalous claims behaviour in U.S. crop insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 157-183, January.
    3. Kovačević, Vlado & Jeločnik, Marko, 2019. "Development of risk management instruments in the EU," Rural Areas and Development, European Rural Development Network (ERDN), vol. 16.

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    Risk and Uncertainty;

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