MARKETING AND CROP INSURANCE COMBINED TO MANAGE RISK ON A CASS COUNTY REPRESENTATIVE FARM

This study analyzed the effects that the use of crop insurance products and marketing alternatives had on the gross revenue per acre for an individual farm in Cass County. Crop insurance products and marketing strategies were analyzed individually to determine if they were effective in minimizing down side risk, and combined to determine if integration created synergies. A whole farm scenario analysis was run that included integrated strategies that implemented the same insurance coverage and marketing alternatives for each crop. Several general conclusions can be drawn for situations similar to the representative farm. When analyzed at the individual crop level, the use of crop insurance at the 65 percent level minimizes down side risk in wheat and corn, but not significantly in soybeans. Marketing alternatives generally increase the up side potential of gross revenue per acre, while doing little to minimize the down side risk. The integration of crop insurance products and marketing alternatives create a synergy at the lower levels of value at risk, where the down side risk is located. However, the use of integrated strategies does not increase the chances of achieving a cash flow breakeven gross revenue per acre over the base strategy, which did not include insurance or marketing alternatives. The breakeven level is not reached until the 70 percent level, which means that 7 out of 10 years, the farm will not cash flow. Output from the Bullock and AgRisk models are similar. This study may be used as a guide for producers and analysts in studying risk management strategies. To assist in the individual decision making process, further study will need to be done with yield data and budgets for the individual farm.risk, management, strategy, yield, price, insurance, market, Risk and Uncertainty,

ECONOMIC IMPACTS OF FUSARIUM HEAD BLIGHT IN WHEAT

Fusarium Head Blight (FHB), commonly known as scab, has been a severe problem for wheat producers in recent years. This study estimates the economic value of crop losses suffered by wheat producers in the 1990s. Nine states and three wheat classes are included in the analysis, which considers the effects of scab on both production and average prices received. The cumulative value of losses (1991-97) in scab-affected regions is estimated at $1.3 billion. Two states, North Dakota and Minnesota, account for over two-thirds of these dollar losses.Fusarium Head Blight, scab, crop losses, wheat, Production Economics,

SHORTFALLS IN 1997 NET FARM INCOME IN NORTH DAKOTA (Prepared for Senators Byron Dorgan and Kent Conrad)

North Dakota net farm income declined in 1997 due to adverse weather conditions and low prices. The total income loss in 1997 was estimated to be $394 million, which was divided into$290 million due to weather and diseases, and $104 million due to lower-than-average prices. Net farm income losses were largest in Region 3 (Northeast), followed by Regions 1 (Northwest) and 6 (East Central). HRS wheat accounted for the largest income loss, followed by durum and barley.Net farm income, crop losses, weather conditions, North Dakota input output model, Agricultural Finance,

BRAZIL'S SOYBEAN PRODUCTION AND IMPACT

Soybean production in Brazil has grown rapidly in recent years. The objective of this publication is to evaluate the potential impact of Brazilian soybean production on North Dakota and other producers. Brazil, followed by Argentina, is the leading producer in South America. All South American soybean production surpassed the United States during 2002-03. In Brazil, production and yields have grown the fastest in Mato Grosso (Center-West) and other expansion states that have Cerrado land. Soybean costs of production for 2003 harvest are considerably lower in Mato Grosso than in North Dakota and Iowa even when freight costs to Rotterdam are considered, giving them a strong competitive position in the world market. Consequently, Mato Grosso soybean production is considerably more profitable. In the future, a 500 percent increase in Brazil cropland acres is possible. It would appear that world demand can accommodate the current pace of growth in Brazil at prices profitable to North Dakota producers

MARKETING AND CROP INSURANCE COMBINED TO MANAGE RISK ON A CASS COUNTY REPRESENTATIVE FARM

This study analyzed the effects that the use of crop insurance products and marketing alternatives had on the gross revenue per acre for an individual farm in Cass County. Crop insurance products and marketing strategies were analyzed individually to determine if they were effective in minimizing down side risk, and combined to determine if integration created synergies. A whole farm scenario analysis was run that included integrated strategies that implemented the same insurance coverage and marketing alternatives for each crop. Several general conclusions can be drawn for situations similar to the representative farm. When analyzed at the individual crop level, the use of crop insurance at the 65 percent level minimizes down side risk in wheat and corn, but not significantly in soybeans. Marketing alternatives generally increase the up side potential of gross revenue per acre, while doing little to minimize the down side risk. The integration of crop insurance products and marketing alternatives create a synergy at the lower levels of value at risk, where the down side risk is located. However, the use of integrated strategies does not increase the chances of achieving a cash flow breakeven gross revenue per acre over the base strategy, which did not include insurance or marketing alternatives. The breakeven level is not reached until the 70 percent level, which means that 7 out of 10 years, the farm will not cash flow. Output from the Bullock and AgRisk models are similar. This study may be used as a guide for producers and analysts in studying risk management strategies. To assist in the individual decision making process, further study will need to be done with yield data and budgets for the individual farm

ECONOMIC IMPACTS OF FUSARIUM HEAD BLIGHT IN WHEAT

Fusarium Head Blight (FHB), commonly known as scab, has been a severe problem for wheat producers in recent years. This study estimates the economic value of crop losses suffered by wheat producers in the 1990s. Nine states and three wheat classes are included in the analysis, which considers the effects of scab on both production and average prices received. The cumulative value of losses (1991-97) in scab-affected regions is estimated at $1.3 billion. Two states, North Dakota and Minnesota, account for over two-thirds of these dollar losses

SHORTFALLS IN 1997 NET FARM INCOME IN NORTH DAKOTA (Prepared for Senators Byron Dorgan and Kent Conrad)

North Dakota net farm income declined in 1997 due to adverse weather conditions and low prices. The total income loss in 1997 was estimated to be $394 million, which was divided into$290 million due to weather and diseases, and $104 million due to lower-than-average prices. Net farm income losses were largest in Region 3 (Northeast), followed by Regions 1 (Northwest) and 6 (East Central). HRS wheat accounted for the largest income loss, followed by durum and barley