Risk Mgmt for Ag Business
What is it called when you have the possibility of encountering harm or loss from an action, decision, or event?
Risk
The field of _______ __________ is allowing producers to know more about risks and possibly shift the risks from damage control to opportunities.
data analytics
In 1999, the most common risk strategy was
cash on hand
Which type of commodity has the highest share of farms using on-farm storage?
Corn
What does FCIP stand for?
Federal crop insurance program
A popular way to "transfer risk" is to purchase
Insurance
The four types of risks are
Compliance, Hazard, Control, Opportunity
Over time, farm production diversification has
slowly declined
(What does this mean and what is it's implications?)
What is the average premium subsidy rate in 2020? (total premium subsidized by the federal government)
63%
Which event contributes most in cost to billion dollar events in the US?
Hurricanes
If a producer decides to have multiple, non-related enterprises on their operation, they are
diversifying.
Compliance
(there is no benefit to not be compliant to a policy, regulation, etc to the producer)
The size of farms that has the most diversificiation
Very large ($5M+)
In general, the number of farms that have succession planning in place are
fairly low. Around 30-40%
In general, the size of farm that utilizes the most risk management strategies are
the very large farms
What are the four ag risk management strategies?
Avoid, Reduce, Retain, Transfer
(know examples of each, specific actions)
What type of risks are those that are deliberately sought or embraced by the organization/producer?
Opportunity
What is the most common diversification strategy?
Off farm employment
For a small farm, what is the number one risk management tool?
Cash savings
What is the range of coverage levels for rainfall in PRF?
70-90%
What are the 5 categories of agricultural risk?
Production, Marketing, Financial, Legal, Human
(know examples of each)
Regulation requirements changing or differing across countries is an example of
geopolitical risk
Which size of farms has the highest ratio of savings to their GCFI?
Which commodity is the highest?
Residence farms, poultry
(29x, also know what is GCFI)
What type of program is a periodically available to supplement when needed or there is a disaster?
Ad Hoc Programs
What is the maximum amount of cattle that can be insured in LRP?
25000