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

Frank S. Novak and Scott R. Jeffrey

No 346372, 11th Congress, University of Calgary, Canada, July 14-19, 1997 from International Farm Management Association

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.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 20
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ifma97:346372

DOI: 10.22004/ag.econ.346372

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