Livestock Gross Margin–Dairy: An Assessment of Its Effectiveness as a Risk Management Tool and Its Potential to Induce Supply Expansion

Kenneth Burdine, Yoko Kusunose, Leigh J. Maynard, Don Blayney and Roberto Mosheim

Journal of Agricultural and Applied Economics, 2014, vol. 46, issue 2, 245-256

Abstract: An evaluation of the risk-reducing effectiveness of the Livestock Gross Margin–Dairy (LGM-Dairy) insurance program, using historical futures price data, predicts economically significant reductions in downside margin risk (24–41%) across multiple regions. Supply analysis based on the estimated risk reduction shows a small supply response, assuming minimal subsidization. A decomposition of the simulated indemnities into milk price and feed price components shows comovements in futures prices moderating the frequency and levels of indemnities.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jagaec:v:46:y:2014:i:02:p:245-256_00

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