Completed Project Report


Farm Survival, Understanding the Role of Risk Exposure in Financial Decision Making

  • Award Amount: $26,447
  • Regional Center: North Central Extension Risk Management Education Center
  • Grant Program: 2020 Education Projects
  • Project Director: Glennis McClure
  • Email: gmcclure3@unl.edu
  • Organization: University of Nebraska - Lincoln

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Project Overview

Producers make investment decisions based on the difference between expected revenue and production costs. While this approach has worked for quite a while, the decision environment has changed as business shocks have become more frequent. This new business environment requires farmers to update how they make crop investment decisions. Increases in production costs have led to an increase in financial risk exposure while crop insurance has lessened risk exposure. The resulting difference is unclear. Farm location, crop and cropping practice (irrigated or dryland) also play a role. 

The goal of this project was to expose farmers and ranchers to the new web-based Ag Budget Calculator (ABC) program and identify farm risk exposure by incorporating a module that calculates and evaluates risk exposure based on enterprise budgeting projections. The ABC program improves on the traditional excel-based budgets, by providing accurate producer specific costs, analysis, and risk exposure features. Producers’ decision making improves by understanding how much money they need when a business shock occurs and how crop insurance contracts and cost of production influence resilience. This project funded the development of the risk exposure module for the ABC program, workshop curriculum on surviving business shocks, and online tutorials.

Number of Participants: 314

Outcomes

Project Steps

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