Livestock Gross Margin-Dairy Insurance: An Assessment of Risk Management and Potential Supply Impacts

Roberto Mosheim, Don Blaney, Kenneth Burdine and Leigh Maynard

No 164606, Economic Research Report from United States Department of Agriculture, Economic Research Service

Abstract: Public risk management policies for dairy producers have the potential to induce expansion in milk supplies, which might lower farm-level prices and offset risk-reduction benefits. An evaluation of USDA’s Livestock Gross Margin-Dairy (LGM-Dairy) insurance program finds economic downside risk significantly reduced, with potential to induce modest supply expansion (0 to 3 percent) if widely adopted. Supply impacts are likely limited due to relatively low participation levels and a minimal (“inelastic”) supply response to risk. LGM-Dairy is more flexible and convenient than other risk management tools, such as hedging directly in futures or options markets, especially for small farms.

Keywords: Agricultural and Food Policy; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 31
Date: 2014-03
New Economics Papers: this item is included in nep-agr, nep-ias and nep-rmg
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uersrr:164606

DOI: 10.22004/ag.econ.164606

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