Farm-Level Analysis of Risk Management Proposals

Bruce A. Babcock, Chad E. Hart, Gary M. Adams, Patrick C. Westhoff
March 2000  [00-WP 238]

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Babcock, B.A., C.E. Hart, G. Adams, and P.C. Westhoff. 2000. "Farm-Level Analysis of Risk Management Proposals." Working paper 00-WP 238. Center for Agricultural and Rural Development, Iowa State University.


This paper presents a detailed report of the representative farm analysis, which analyzed the impacts of two alternative risk management proposals, the Farmers' Risk Management Act of 1999 (S. 1666) and the Risk Management for the 21st Century Act (S. 1580). The representative farm analysis is conducted for several types of farms, including both irrigated and non-irrigated cotton farms, dryland wheat farms, and a corn farm. The authors look at several factors that may shed light on the differential impacts of the two plans, including farm-level income impacts under alternative weather scenarios; additional indirect impacts, such as a change in ability to obtain financing; and the implications of within-year price shocks. The study shows increased crop insurance participation under S. 1580 and increased coverage levels for both yield and revenue insurance buy-up coverage.