Individuals are not the same, nor are their personal and financial circumstances. First, the publication reviews factors affecting decision making in a risky environment. Then it discusses sources of risk, producers' views of variability, and information to improve decision making. Third, it outlines risk management strategies available to producers. The publication concludes with a brief discussion of development of an overall risk-management strategy.
Farmers make decisions in a risky, ever-changing environment.
The consequences of their decisions are generally not known when the decisions are made, and outcomes may be better or worse than expected. Variability of prices and yields are major sources of risk in agriculture. Changes in technology, legal and social concerns, and the human factor itself also contribute to the risky environment for farmers. Farmers and other business people generally do not get into risky situations unless there is a probability of making money. Higher profits are typically associated with higher risks.