EVALUATING RISK MANAGEMENT STRATEGIES FOR NON-IRRIGATED SMALL GRAIN PRODUCERS

Larry D. Makus, H. Holly Wang and Xiaomei Chen

No 22257, 2003 Annual meeting, July 27-30, Montreal, Canada from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Risk management strategies (market and insurance based) are evaluated for selected small grain producers in the Pacific Northwest using expected utility maximization. Equivalent variation (EV) compares alternative risk management portfolios to cash sales under specified restrictions and conditions. Resulting EV's are strongly influenced by government payments, and hedging-based strategies are not used when counter cyclical payments are included in government programs. Optimum risk management portfolios include extensive coverage by insurance-based products only when such products have premiums that are heavily subsidized, or have premiums with no significant expense load.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 24
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea03:22257

DOI: 10.22004/ag.econ.22257

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