Livestock gross margin-dairy insurance: An assessment of risk management and potential supply impacts

Kenny Burdine, Roberto Mosheim, Don P. Blayney, Leigh J. Maynard

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

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.

Original languageEnglish
Title of host publicationU.S. Dairy Support Programs
Subtitle of host publicationFarm Bill Provisions and Gross Margin-Dairy Insurance
Pages43-74
Number of pages32
ISBN (Electronic)9781633217515
StatePublished - Sep 1 2014

Keywords

  • Dairy
  • Gross margins
  • Insurance
  • LGM-Dairy
  • Livestock
  • Milk supplies
  • Risk management

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (all)

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