Impacts of Crop Insurance and Intra-season Hedging on Long-run Net Income Risk
Early in the growing season, producers make risk management decisions based on unknown harvest price and harvest yield. The uncertainty associated with unknown yields and prices makes decisions based on these two key components of your farm’s net income difficult. Hedging tools and crop insurance are available to help mitigate the financial risk associated with unknown harvest yields and harvest prices, however the relationship between risk management tools and the combination of the tools appropriate for your situation is unclear.
This UNL Department of Agricultural Economics article reviews the results of a recent study, which looked at both privately funded tools, such as hedging grain on the futures market, and publicly funded tools, such as government subsidized crop insurance to investigate the role of intra-season hedging strategies and crop insurance.