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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 toinduce 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.

Keywords: dairy ; gross margins ; risk management ; LGM-Dairy ; insurance ; milk supplies ; livestock

Subject(s): Agricultural and Food Policy

Livestock Production/Industries

Issue Date: 2014-03

Publication Type: Report

PURL Identifier: http://purl.umn.edu/164606

Total Pages: 31

Series Statement: Economic Research Report

Number 163

Record appears in: United States Department of Agriculture (USDA) > Economic Research Service > Economic Research Report





Autor: Mosheim, Roberto ; Blaney, Don ; Burdine, Kenneth H. ; Maynard, Leigh J.

Fuente: http://ageconsearch.umn.edu/record/164606?ln=en







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