Agriculture In Transition: Farmers' Use of Risk Management Strategies
Published: 1999-04-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reviewed the Department of Agriculture's (USDA) efforts to educate farmers about risk management, focusing on: (1) the extent of farmers' use of risk management tools; and (2) educational programs and projects USDA has directed or initiated to prepare farmers for managing risks and determining the groups or individuals who have participated in or been served by these programs.
section_title: What GAO Found
paragraphs: GAO noted that: (1) in 1996, about 42 percent of the nation's 2 million farmers used one or more risk management tools to limit potential income losses resulting from falling market prices or production failures, according to USDA estimates; (2) the use of these tools varied by farmers' level of sales and primary commodity (crop or livestock); (3) the use of crop insurance and forward contracts to reduce risk was more prevalent among farmers: (a) with at least $100,000 in annual sales of agricultural products than among those with annual sales under $100,000; and (b) whose primary crops were corn, wheat, and cotton than among those who primarily grew other crops; (4) of those farmers who received USDA transition payments and had sales of at least $100,000, at least 70 percent purchased crop insurance, at least 66 percent used forward contracts, and at least 34 percent engaged in hedging in 1996; (5) in fiscal year 1998, USDA obligated $5 million for four educational initiatives to prepare farmers for managing risk; (6) to develop government and private sector partnerships to foster risk management education, USDA sponsored a series of risk management conferences targeted at bankers, agricultural educators, crop insurance agents, commodity brokers, and grain elevator operators; (7) however, these initial conferences reached only a relatively small percentage of these target groups' members; (8) USDA intends to use partnerships with private- sector organizations to further expand its educational outreach activities; (9) USDA awarded 17 risk management education and research grants that are primarily designed to develop risk management education curriculums for training such diverse groups as farmers with less than $20,000 in annual income, farmers who grow specific crops in individual states or regions, crop insurance agents, and grain elevator operators across the country; (10) the expected completion dates for these projects range from the summer of 1999 through the fall of 2001; (11) USDA provided funding to supplement land grant universities' risk management education efforts; and (12) USDA contracted with the University of Minnesota to develop an Internet library that, as of January 1999, contained over 700 risk management publications and other education materials for farmers.

section_title: Letter
paragraphs: Recent changes in both federal agricultural programs and international  agricultural markets have increased the potential economic risks faced by  the nation’s farmers.  The Federal Agriculture Improvement and Reform  Act of 1996, commonly known as the 1996 farm bill, encouraged farmers to  make production decisions in response to market forces.  It also helped  farmers who were eligible for payments through federal commodity  programs to reduce their reliance on federal support by providing  “transition” payments, which are gradually declining over a 7-year period.   At the same time, U.S. farmers have faced increased global competition,  new technology, and volatile weather patterns.  In light of these changes,  the 1996 farm bill required the U.S. Department of Agriculture (USDA), in  consultation with the Commodity Futures Trading Commission, to educate  farmers about the tools available for managing risks.  These risk  management tools primarily include crop insurance to provide  compensation if crop yields are substantially lower than expected and  forward contracts to enable farmers to lock in a price for their crop or  livestock production prior to harvest or slaughter.  Farmers can also  engage in hedging by buying or selling futures or options contracts on a  commodity exchange, such as the Chicago Board of Trade, to reduce the  risk of receiving lower prices for crops or livestock.  (App. I describes each  of these risk management tools in more detail.)
Concerned about the level of knowledge farmers have about available  federal and private-sector tools for managing risk and the adequacy of  USDA’s initiatives to prepare farmers to use these tools, you requested that  we examine USDA’s efforts to educate farmers about risk management.   Specifically, you asked us to (1) provide information on the extent of  farmers’ use of risk management tools and (2) identify educational  programs and projects USDA has directed or initiated to prepare farmers  for managing risks and to determine the groups or individuals who have  participated in or been served by these programs.  To address the first  objective, we obtained data from USDA’s Agricultural Resource  Management Study for 1996, the most current year in which USDA  surveyed farmers about their use of risk management tools.
subsections: section_title: Background
paragraphs: Farming has always been a risky endeavor, and farmers have always had to  manage risk as a part of doing business.  Over the years, the federal  government has played an active role in several ways to help mitigate the  effects of production losses and low prices on farm income.  For example,  USDA's Risk Management Agency (RMA) administers the federal crop  insurance program to protect farmers against major production losses.   Under this program, RMA subsidizes the federal multiple-peril crop  insurance program, which allows insured farmers to receive an indemnity  payment if production falls below a certain level.  In addition, to help  protect farmers against the risk of low crop prices, USDA’s Farm Service  Agency administered price- and income-support programs for farmers who  grew certain crops--corn, wheat, grain sorghum, barley, oats, cotton, and  rice.
The 1996 farm bill changed the government’s role.  It replaced the income- support programs with “production flexibility contracts” that provide for  fixed but declining annual payments to participating farmers from 1996  through 2002.  These government payments--known as transition  payments--are not tied to market prices, and participating farmers are not  restricted with regard to the type or amount of crops that they plant, as  they were in the earlier programs.  Furthermore, unlike the deficiency  payments of the last 6 decades, the transition payments do not rise in years  when crop prices are low, nor do they fall in years when prices are high.  As  shown in table 1, the 1996 farm bill specified that transition payments  would total about $36 billion over the 7-year period, declining from about  $5.6 billion in 1996 to about $4 billion in 2002.
By giving farmers increased flexibility in deciding which crops to plant, the  1996 farm bill allows them to choose the particular crop or combination of  crops that they believe offers the best chance to maximize their profits and  offset the decline in income resulting from lower government payments.   However, the increased flexibility in planting decisions brings other risks.   For example, small increases in expected profits may lead many farmers to  decide to increase the acreage devoted to a particular crop.  This, in turn,  could result in the increased production of the crop nationwide and  ultimately in lower prices as a result of the greater supply.
Section 192 of the 1996 farm bill required that USDA, in consultation with  the Commodity Futures Trading Commission (CFTC), educate farmers in  managing the financial risks inherent in producing and marketing  agricultural commodities.  The act specified that, as a part of such  education activities, USDA may develop and implement programs to assist  and train farmers in using (1) forward contracts, which enable farmers to  lock in a price for their crop or livestock production prior to harvest or  slaughter, (2) crop insurance, which ensures compensation if crop yields  are substantially lower than expected, and (3) hedging--buying or selling  futures or options contracts on a commodity exchange, such as the  Chicago Board of Trade--which reduces the risk of receiving lower prices  for crops or livestock.   The act authorized USDA to use its existing  research and extension authorities and resources to implement this  provision.
In March 1997, the Secretary of Agriculture organized a steering committee  to direct the government's education activities for managing agricultural  risk.  The steering committee is chaired by RMA’s administrator and  includes a CFTC commissioner; the administrator of USDA’s Cooperative  State Research, Education, and Extension Service (CSREES); and the  director of USDA's National Office of Outreach.  These agencies have  different responsibilities.  RMA primarily administers the federal crop  insurance program; the 1996 farm bill expanded its authority to include a  broader risk management perspective.  CFTC, which regulates commodity  futures and options trading in the United States, also develops and  maintains research and informational programs concerning futures and  options trading for farmers, commodity market users, and the general  public.  CSREES develops and conducts agricultural research, higher  education, and extension programs to provide education and technical  assistance to farmers and the general public.  USDA's National Office of  Outreach is responsible for ensuring that information, technical assistance,  and training are available to all USDA customers, with an emphasis on  underserved populations.
section_title: Farmers’ Use of Risk Management Tools Varied by Size of Farming Operation and Commodity
paragraphs: USDA’s 1996 Agricultural Resource Management Study (Phase 3), based on  a statistical sample of farmers, found that about 42 percent of the nation’s 2  million farmers used at least one of the risk management tools--forward  contracts, crop insurance, or hedging--to manage their income risk.  In  1996, a substantially greater percentage of farmers with agricultural sales  of at least $100,000 (large-scale farmers) used each risk management tool  than did farmers whose agricultural sales were less than $100,000 (small- scale farmers).  Similarly, a greater percentage of farmers whose primary  crops were corn, wheat, or cotton purchased crop insurance and used  forward contracts than did farmers who grew other field crops.  (App. II  provides detailed data on farmers’ use of risk management tools by sales  level, commodity, geographic region, and the receipt of USDA transition  payments.)
subsections: section_title: A Greater Percentage of Large-Scale Farmers Used Risk Management Tools Than Did Small-Scale Farmers
paragraphs: Table 2 shows that, among all U.S. farmers, a substantially greater  percentage of large-scale farmers used each risk management tool than did  small-scale farmers in 1996. Among large-scale farmers, at least 52 percent  purchased crop insurance, at least 55 percent used forward contracts, and  at least 32 percent engaged in hedging.  In contrast, no more than 16  percent of small-scale farmers purchased crop insurance, no more than 29  percent used forward contracts, and no more than 22 percent engaged in  hedging.  Available data were insufficient to determine whether large-scale  farmers hedged with futures or options contracts to a greater extent than  small-scale farmers in 1996.
Table 3 shows that at least 70 percent of those large-scale farmers who  received transition payments purchased crop insurance, at least 66 percent  used forward contracts, and at least 34 percent engaged in hedging in 1996.   However, the minimum extent of usage was even greater among farmers  who had more than $500,000 in sales and received transition payments--at  least 73 percent purchased crop insurance, at least 78 percent used forward  contracts, and at least 50 percent engaged in hedging in 1996.
section_title: A Larger Proportion of Farmers Who Primarily Grew Major Field Crops Used Crop Insurance and Forward Contracts Than Did Other Farmers
paragraphs: As table 4 shows, among all U.S. farmers, a greater percentage of those  whose primary crop was corn, wheat, or cotton purchased crop insurance  and engaged in forward contracting than did farmers who grew other field  crops or raised livestock in 1996.  Among farmers who primarily grew corn,  wheat, and cotton, at least 54 percent purchased crop insurance and at  least 50 percent used forward contracts.  In contrast, among farmers who  primarily raised other field crops, 43 percent at most purchased crop  insurance and 45 percent at most used forward contracts.  In addition,  hedging was used by at least 35 percent of cotton farmers, which was a  higher percentage than for farmers who grew other field crops in 1996.   However, available data were insufficient to determine whether corn and  wheat farmers engaged in hedging with futures or options contracts to a  greater extent than did farmers who primarily raised other crops or  livestock.
Table 5 shows that, among corn farmers who received transition payments,  at least 54 percent purchased crop insurance, at least 61 percent used  forward contracts, and at least 31 percent engaged in hedging in 1996.   Among wheat farmers who received transition payments, at least 81  percent purchased crop insurance, at least 46 percent used forward  contracts, and at least 15 percent engaged in hedging.  Among cotton  farmers who received transition payments, at least 88 percent purchased  crop insurance, at least 59 percent used forward contracts, and at least 25  percent engaged in hedging.
section_title: USDA Focused Risk Management Education Efforts on Developing Public and Private Partnerships
paragraphs: To prepare farmers for managing their risks, USDA has focused primarily  on developing regional or state partnerships of government, university, and  private organizations to foster a risk management educational program.   The university partners developed and implemented a series of regional  and local risk management conferences targeted initially at groups that  influence farmers--bankers, crop insurance agents, grain elevator  operators, and agricultural educators.  USDA expects that these individuals  will provide farmers with specific information for using risk management  tools as the program continues.  During fiscal year 1998, USDA also  awarded 17 grants for risk management education projects, provided  funding to land grant universities to promote additional risk management  education efforts, and funded the development of an electronic risk  management education library.
In fiscal year 1998, USDA obligated $5 million of RMA’s $10 million for crop  insurance research to RMA’s risk management education initiatives-- amounting to about $2.50 per U.S. farmer.  These funds were the  predominant source of risk management education funding within USDA.   In comparison, a CSREES official told us that CSREES typically obligates  only about $100,000 per year, primarily for specific risk management  education projects.  The official noted that land grant universities may also  use a portion of their general CSREES education funding to support risk  management education projects; however, the amount that universities  spent in fiscal year 1998 is not known.  For fiscal year 1999, USDA has  allocated $1 million of RMA’s $3.5 million for crop insurance research to  risk management education.
subsections: section_title: USDA’s Conferences and Regional Partnerships
paragraphs: In response to the 1996 farm bill’s requirement that it educate farmers  about managing their production and marketing risks, USDA used a  September 1997 national risk management education summit to initiate a  series of 20 national and regional risk management education conferences.   USDA’s conferences focused on developing partnerships with “third-party  influencers” in an effort to leverage the available government funds to train  those who are in a position to educate farmers on risk management tools.   According to USDA’s director of risk management education, the training  would enable third-party influencers to demonstrate to farmers how the  various tools fit together in an overall risk management and marketing  plan.  These individuals interact frequently with farmers and are in a  position to influence the risk management decisions farmers make.  For  example, land grant college or extension service educators provide various  training and advisory services to farmers on both the production and  business aspects of farming.  Crop insurance agents meet with farmers  several times during the year as the farmers decide on insurance coverage  levels and provide the agents with information on acres planted and final  crop production levels.  The bank or farm credit services loan officers meet  with farmers to discuss business plans and arrange for operating loans.   Commodity brokers interact with farmers who choose to engage in hedging  with futures or options.  Farmers interact with grain elevator operators  when they sell their crops on either a cash or forward contract basis.   According to RMA, the conferences helped participants to gain information  and knowledge about areas outside their own expertise.  For example,  commodity brokers learned more about crop insurance, and crop  insurance agents learned more about the futures market.
As of December 1998, USDA’s major conferences had reached a relatively  small percentage of the target groups’ members.  Table 6 shows that 335 (2  percent) of about 15,000 crop insurance agents in the United States had  attended a USDA-sponsored risk management conference.  Similarly, only  251 bankers and 96 grain elevator operators had attended the conferences,  although there are about 3,200 agricultural banks and about 10,000 grain  elevators in the United States.  About 20 percent of the conference  attendees were USDA or other government agency employees, rather than  members of the groups influencing farmers.
Conference speakers generally presented broad, overview information  about a number of farm management areas without providing detailed  information addressing specific problems in any single area.  According to  RMA officials, providing overview information was appropriate because it  enabled participants to appreciate how their specialty area interacts with  other areas for the benefit of farmers.  USDA also expanded the scope of  the conferences to discuss more than the two risk areas that the 1996 farm  bill had identified--producing and marketing agricultural commodities.   Sections of the conferences also addressed tools for reducing financial  risks, legal risks, and human resource risks, in addition to tools for  reducing production and marketing risks.  RMA officials noted that  financial, legal, and human resource risks are also significant concerns for  farmers.
RMA officials consider the risk management conferences to be a first step  in developing regional and state partnerships with USDA, universities, and  private organizations to provide risk management education to farmers.   USDA has designated five land grant university educators as regional  coordinators of its risk management education program.  (App. III  identifies, for each region, the coordinator’s university affiliation, the  associated RMA regional service offices, and the states covered.)  The  regional coordinators are responsible for (1) working with private sector  partners, including bankers, crop insurance company representatives, and  farmer organizations, to develop regional and local conferences, meetings  and other training efforts and (2) serving as a focal point for providing  information about the risk management education opportunities in each  region.   State and local educational activities, training sessions, and events  sponsored by these partnerships have begun to reach additional farmers  and individuals who influence farmers’ decisions.
In fiscal year 1998, USDA spent $1.5 million to support the risk  management conferences and initiate regional partnerships, including  about $300,000 for the conferences, $250,000 for publications and  materials, $133,000 for the regional coordinating offices, and $45,000 for an  evaluation project.  USDA also spent about $350,000 for special outreach  projects designed to enhance the risk management skills of small and  minority producers in areas described as underserved by traditional risk  management tools and $50,000 to sponsor a Future Farmers of America  essay contest on risk management.
section_title: Risk Management Education Grants
paragraphs: In addition to sponsoring conferences and developing regional  partnerships, USDA awarded a series of risk management education and  research grants totaling $3 million.  In February 1998, USDA issued a  request for proposals in the Federal Register.  Subsequently, a peer review  team, working under the risk management education steering committee,  evaluated 107 proposals requesting over $19 million.  In June 1998, USDA  awarded 17 risk management education grants, ranging from $19,172 to  $250,000, and averaging about $178,000.  USDA awarded 12 grants to land  grant colleges and universities, 3 to other educational entities, 1 to a crop  insurance industry organization, and 1 to a grain elevator industry  organization.  Most of the grants included additional public and private  sector partners who agreed to participate in the projects with the primary  grantees.  With expected project completion dates ranging from the  summer of 1999 through the fall of 2001, the projects are currently ongoing,  and thus, in many cases, the training phase has not begun.
The grant projects target diverse audiences--ranging from farmers with  limited resources, farmers growing specific commodities in individual  states or regions, and dairy farmers to crop insurance agents and grain  elevator operators across the country--and were for diverse purposes.  For  example, the grantees focused on different geographic coverages:  seven  planned national coverage, four targeted regional audiences, and six  directed their efforts in a single state.  Similarly, some of the grantees  focused on particular groups:  four targeted limited resource or minority  farmers, one focused on the risk management needs of citrus farmers, and  one focused on dairy farmers.  Typically, the projects focused on training,  including a curriculum development phase, a "train the trainer" phase, and  a series of seminars or workshops.  However, two grants provided for  research about farmers’ use of and need for risk management tools.  (App.  IV provides information about the grantees, grant amount, and objectives  for each of the 17 grants.)
section_title: Funding Risk Management Education at Land Grant Universities
paragraphs: As a third element of its risk management education initiative in fiscal year  1998, USDA provided $362,000, divided among 96 land grant colleges and  universities, to promote and augment their risk management education  programs.  According to USDA, these funds enabled the cooperative  extension system to reach farmers during the winter of 1998-99 with a  substantial risk management curriculum, including (1) regional video  teleconferences, (2) small producer workshops at the local level, and (3)  fact sheets, teaching guides, and classroom visual aids adapted to  agricultural conditions in a particular state.
section_title: Electronic Library
paragraphs: In the fourth part of its response to the legislative mandate, USDA entered  into a $200,000 contract with the University of Minnesota to develop an  Internet website that provides an electronic library of risk management  education materials.  As of January 1999, the website contained over 700  risk management publications, presentations, decision aids, and other  materials either resident on the site or linked to it.  This information is  useful to farmers as well as to the groups that influence them.  On average,  about 60 individuals per day made use of the website in January 1999.
section_title: Agency Comments
paragraphs: We provided the U.S. Department of Agriculture with a draft of this report  for review and comment.  We met with Agriculture officials, including the  Administrator of the Risk Management Agency, who stated that the agency  agreed with the report and that the report was balanced and accurate.   However, the Department believed that the report should (1) provide more  detailed information on how the $5 million for risk management education  initiatives was spent, (2) discuss the Risk Management Agency’s regional  and local risk management conferences in the context of its broader effort  to establish public and private partnerships, and (3) discuss the Risk  Management Agency’s efforts to provide risk management education  through land grant universities as a separate initiative.  We revised the  report to more fully identify the various education initiatives that the Risk  Management Agency has funded, explain that one of the purposes of the  agency’s conferences was to foster public-private partnerships, and identify  the support for the outreach efforts of land grant universities as a separate  initiative.  In addition, the Department provided comments to improve the  report’s technical accuracy, which we incorporated as appropriate.
section_title: Scope and Methodology
paragraphs: To determine the extent to which various groups of farmers have used risk  management tools, we obtained national agricultural survey data from  USDA's Agricultural Resource Management Study (Phase 3) for 1996-- formerly called the Farm Costs and Returns Survey.  The 1996 survey,  based on a statistical sample, provides the most current, comprehensive  data on farmers’ use of risk management tools.  About 7,300 farmers  responded to the risk management questions.  The 1997 study did not  include specific questions about risk management strategies because it was  designed to accommodate questions required by the 1997 agricultural  census.  USDA’s Economic Research Service, which recently published an  analysis of the 1996 survey data, provided the statistical data for this  report.
To identify education programs and projects USDA has directed or initiated  to prepare farmers for managing risk, we interviewed and obtained  documentation from USDA headquarters and regional officials, as well as  from regional risk management coordinators.  To determine the groups or  individuals who have participated in or been served by these programs, we  interviewed and obtained documentation from cognizant USDA officials,  academicians, and other private sector organizations involved in planning  and carrying out risk management seminars and other educational and  research efforts.  We also interviewed representatives of farmer  organizations about RMA’s approach.
We performed our work from June 1998 through February 1999 in  accordance with generally accepted government auditing standards.  We  did not, however, independently verify data obtained from USDA officials  and documents.  USDA's Agricultural Resource Management Study data  are the only comprehensive data available that examine farmers’ use of risk  management tools.
We are sending copies of this report to Representative Larry Combest,  Chairman, House Committee on Agriculture, and appropriate  congressional committees.  We are also sending copies to the Honorable  Dan Glickman, the Secretary of Agriculture; the Honorable Jacob Lew,  Director, Office of Management and Budget; and other interested parties.   We will also make copies available upon request.
Please contact me at (202) 512-5138 if you or your staff have any questions  about this report.  Major contributors to this report are Richard Cheston,  Mary Kenney, Renee McGhee-Lenart, and Robert R. Seely, Jr.
section_title: Descriptions of Risk Management Tools
paragraphs: The following are brief explanations of the three risk management tools  discussed in our report:
Crop insurance:  Protects participating farmers against the financial  losses caused by events such as droughts, floods, hurricanes, and other  natural disasters.  Federal crop insurance offers farmers two primary  types of insurance coverage.  The first--called catastrophic insurance-- provides protection against the extreme losses of crops for the payment  of a $60 processing fee, whereas the second--called buyup insurance-- provides protection against the more typical smaller losses of crops in  exchange for a premium paid by the farmer.
Forward contract:  A cash market transaction in which two parties agree  to buy or sell a commodity or asset under agreed-upon  conditions.  For  example, a farmer or rancher agrees to sell, and a local grain elevator or  packing plant agrees to buy, the commodity or livestock at a specific  future time for an agreed-upon price or on the basis of an agreed on  pricing mechanism.  With this agreement, a farmer locks in a final price  for a commodity prior to harvest or slaughter.
Hedging:  The purchase or sale of a futures contract or an option on an  organized exchange, such as the Chicago Board of Trade.  A hedge is a  temporary substitute for an intended subsequent transaction in the cash  market to minimize the risk of an adverse price change.  For example,  corn farmers interested in locking in the sale price of all or part of their  crops would sell corn futures as a temporary substitute for the cash  market sale they intend to make at a later date.  The sales transaction is  carried out through a commodity broker.  More specifically:
Futures contract:  An agreement for the purchase or sale of a  standardized amount of a commodity, of standardized quality grades,  during a specific month, on an organized exchange and subject to all  terms and conditions included in the rules of that exchange.
Option:  The right, but not the obligation, to buy or sell a specified  number of underlying futures contracts or a specified amount of a  commodity, currency, index, or financial instrument at an agreed- upon price on or before a given future date.
Other tools are also available to help farmers manage their risks.  For a  brief discussion of these tools, see “Risk Management:  Farmers Sharpen  Tools to Confront Business Risks,” Agricultural Outlook, March 1999.
section_title: Use of Risk Management Tools by All Farmers and Farmers Who Received Transition Payments
paragraphs: This appendix provides detailed information that we obtained from the U.S.  Department of Agriculture’s (USDA) Economic Research Service  concerning farmers’ use of risk management strategies.  This information is  based on the 1996 Agricultural Resource Management Study; about 7,300  farm operators responded to the risk management questions.  Using the  data the Service provided, we calculated confidence intervals.  The  Economic Research Service’s estimates and associated confidence  intervals are presented in tables II.1 through II.12.
Confidence interval (Dollars in millions)
Agricultural sales(Dollars in millions)
Defined as operator has household income under $20,000, farm assets under $150,000, and gross  farm sales under $100,000.
Defined as operator’s primary occupation is retired.
Defined as operator’s primary occupation is “other”--neither farming nor retired.
Defined as operated by nonfamily corporations, cooperatives, or hired managers.
subsections: section_title: Table II.2: Percentage of Farmers Who Used Each Risk Management Tool, by Farm Sales Level, 1996
paragraphs: Confidence interval (Range)
Confidence interval (Range)
Confidence interval (Range)
19-29 (1)-19Defined as operator has household income under $20,000, farm assets under $150,000, and gross  farm sales under $100,000.
The operator’s primary occupation is retired.
The operator’s primary occupation is “other”--neither farming nor retired.
Operated by nonfamily corporations, cooperatives, or hired managers.
section_title: Table II.3: Number of Farmers Who Received Transition Payments and the Value of Their Agricultural Sales, by Farm Sales Level, 1996
paragraphs: Confidence interval (Dollars in millions)
Agricultural sales(Dollars in millions)
100,034 (1,117) $4,510.8 ($63.2)
Defined as operator has household income under $20,000, farm assets under $150,000, and gross  farm sales under $100,000.
Confidence interval calculations are not exact because of the small sample size or other  characteristics of the sample results.
Defined as operator’s primary occupation is retired.
Defined as operator’s primary occupation is “other”--neither farming nor retired.
Defined as operated by nonfamily corporations, cooperatives, or hired managers.
section_title: Table II.4: Percentage of Farmers Who Used Each Risk Management Tool Among Those Who Received Transition Payments, by Farm Sales Level, 1996
paragraphs: Confidence interval (Range)
Confidence interval (Range)
Confidence interval (Range)
36-56 (14)-4418-42 (9)-31Defined as operator has household income under $20,000, farm assets under $150,000, and gross  farm sales under $100,000.
USDA is required to protect the privacy of respondents by withholding data if it receives too few  responses in a particular category.
Defined as operator’s primary occupation is retired.
Defined as operator’s primary occupation is “other”--neither farming nor retired.
Defined as operated by nonfamily corporations, cooperatives, or hired managers.
section_title: Table II.5: Number of U.S. Farmers and the Value of Their Agricultural Sales, by Principal Commodity, 1996
paragraphs: Confidence interval (Dollars in millions)
Agricultural sales(Dollars in millions)
Table II.6:  Percentage of Farmers Who Used Each Risk Management Tool, by Principal Commodity, 1996 Confidence interval (Range)
Confidence interval (Range)
Table II.7:  Number of Farmers Who Received Transition Payments and the Value of Their Agricultural Sales, by Principal  Commodity, 1996 Confidence interval (Dollars in millions)
Agricultural sales(Dollars in millions) (1,605) $4,470.5 Table II.8:  Percentage of Farmers Who Used Each Risk Management Tool Among Those Who Received Transition Payments, by  Principal Commodity, 1996 Confidence interval (Range)
Confidence interval (Range)
Confidence interval (Range)
USDA is required to protect the privacy of respondents by withholding data if it receives too few  responses in a particular category.
section_title: Table II.9: Number of U.S. Farmers and the Value of Their Agricultural Sales, by Geographic Region, 1996
paragraphs: Confidence interval (Dollars in millions)
Agricultural sales (Dollars in millions) $7,707.4 ($38.8)
Includes Kansas, Nebraska, North Dakota, and South Dakota.
Includes Illinois, Indiana, Iowa, Missouri, and Ohio.
Includes Michigan, Minnesota, and Wisconsin.
Includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.
Includes California, Oregon, and Washington.
Includes Kentucky, North Carolina, Tennessee, Virginia, and West Virginia.
Includes Alabama, Florida, Georgia, and South Carolina.
Includes Arkansas, Louisiana, and Mississippi.
Includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New  York, Pennsylvania, Rhode Island, and Vermont.
Includes Oklahoma and Texas.
section_title: Table II.10: Percentage of Farmers Who Used Each Risk Management Tool, by Geographic Region, 1996
paragraphs: Confidence interval (Range)
Confidence interval (Range)
Confidence interval (Range)
Includes Kansas, Nebraska, North Dakota, and South Dakota.
Includes Illinois, Indiana, Iowa, Missouri, and Ohio.
Includes Michigan, Minnesota, and Wisconsin.
Includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.
Includes California, Oregon, and Washington.
Includes Kentucky, North Carolina, Tennessee, Virginia, and West Virginia.
Includes Alabama, Florida, Georgia, and South Carolina.
Includes Arkansas, Louisiana, and Mississippi.
Includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New  York, Pennsylvania, Rhode Island, and Vermont.
Includes Oklahoma and Texas.
section_title: Table II.11: Number of Farmers Who Received Transition Payments and the Value of Their Agricultural Sales, by Geographic Region, 1996
paragraphs: Confidence interval (Dollars in millions)
Agricultural sales(Dollars in millions)
9,632 (2,845) $2,962.3 ($1,145.3)
Includes Kansas, Nebraska, North Dakota, and South Dakota.
Includes Illinois, Indiana, Iowa, Missouri, and Ohio.
Includes Michigan, Minnesota, and Wisconsin.
Includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.
Includes California, Oregon, and Washington.
Includes Kentucky, North Carolina, Tennessee, Virginia, and West Virginia.
Includes Alabama, Florida, Georgia, and South Carolina.
Includes Arkansas, Louisiana, and Mississippi.
Includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New  York, Pennsylvania, Rhode Island, and Vermont.
Confidence interval calculations are not exact because of the small sample size or other  characteristics of the sample results.
Includes Oklahoma and Texas.
section_title: Table II.12: Percentage of Farmers Who Used Each Risk Management Tool Among Those Who Received Transition Payments, by Geographic Region, 1996
paragraphs: Confidence interval (Range)
Confidence interval (Range)
Confidence interval (Range)
42-84 (7)-7141-73 (32)-9067-87 (32)-82Includes Kansas, Nebraska, North Dakota, and South Dakota.
Includes Illinois, Indiana, Iowa, Missouri, and Ohio.
Includes Michigan, Minnesota, and Wisconsin.
Includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.
Includes California, Oregon, and Washington.
Includes Kentucky, North Carolina, Tennessee, Virginia, and West Virginia.
Includes Alabama, Florida, Georgia, and South Carolina.
Includes Arkansas, Louisiana, and Mississippi.
Includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey,  New York, Pennsylvania, Rhode Island, and Vermont.
Includes Oklahoma and Texas.
section_title: Regional Coordinators for Risk Management Education
paragraphs: Cognizant RMA  regional service  office(s)
section_title: Project Descriptions of the Risk Management Education Grants
paragraphs: Integrated Risk Management Education  ($248,461) Grantee:  South Central Technical College (North Mankato, Minnesota)
The objective of this project is to develop an integrated risk management  education curriculum and deliver it via educational programs for farmers in  Minnesota, North Dakota, and South Dakota.  The project will develop  local educational teams of agricultural professionals.
Understanding Farmer Risk Management Decision Making and Educational  Needs ($243,388) Grantee:  Mississippi State University The objective of this project is to develop the knowledge base to guide the  design and implementation of effective risk management programs for  agricultural producers.  The project will identify the risk management  objectives of diverse agricultural producers, investigate perceptions and  understanding of risk management tools and strategies, examine the  factors influencing choices of risk management strategy, and study how  information and analysis influence producers’ perceptions and risk  management choices.
Risk Management Education With Focus on Producers and Lender  Stakeholders ($250,000) Grantee:  Pennsylvania State University The objective of this project is to help farmers and lenders manage risks  and expand the understanding of risk management with a focus on farmer  liquidity constraints.  The project will develop and distribute a risk  management curriculum to farmers, provide training and workshops,  improve risk management financial expertise with workshop applications  tailored to lenders, and use computers and telecommunications in risk  management education.
Managing Risks and Profits for the National Grain Industry:  A Whole-Farm  Approach ($72,180) Grantee:  Ohio State University Extension Service The objective of this project is to create and deliver information and  analytical tools to help grain farmers and agribusinesses manage their risks  and profits for entire farms.  The project will create and revise risk  management programs for whole-farm assessment, analyze profit levels  and cash-flow risks, create a risk management center at Iowa State  University, measure the risk tolerance of farm operators, and analyze the  effectiveness of innovative information delivery systems.
National Program for Integrated Dairy Risk Management Education and  Research ($129,600) Grantee:  Ohio State University The objective of this project is to focus public and private expertise on  generating understandable, useful, and results-oriented knowledge and  tools for the dairy industry.  The project will develop a risk management  educational curriculum for dairy producers, conduct symposia and  regional training workshops, develop relevant computer software, and  distribute information electronically.
Optimal Grain Marketing: Integrated Approach to Balance Risks and  Revenues ($232,800) Grantee:  National Grain and Feed Foundation The objective of this project is to develop information on commonly  available risk management tools coupled with an assessment of how such  tools can be expected to perform.  The project will reach 500 elevator  operators and 20,000 farmer customers with a standardized methodology  for evaluating new products, with an emphasis on the use of cash  contracts.
Agricultural Risk Management Education for Small and Socially  Disadvantaged Farmers  ($229,808) Grantee:  Virginia State University Cooperative Extension Service The objective of this project is to create risk management educational  materials and help socially disadvantaged and limited-resource farmers in  Virginia, Maryland, Delaware, and North Carolina understand how to  manage risk.  This project will nurture a partnership between the private  crop insurance industry and certain land-grant colleges in the four states,  providing a model for similar efforts elsewhere.  The project will also  integrate risk management education into outreach, training, and technical  assistance programs for small-scale farmers.
Delivery of Agricultural Risk Management Education to Extension Officers  and Small-Scale Farmers ($150,000) Grantee:  Alcorn State University The objective of this project is to develop and implement risk management  education for students, extension agents, small-scale farmers, limited- resource cooperatives, industry groups, and community-based  organizations within 28 Mississippi counties.  It will help small-scale  farmers limit their exposure to marketing, financial, and legal risks.
Georgia Agricultural Risk Management Education Program ($250,000) Grantee:  Georgia Department of Education The objective of this project is to train producers and agribusinesses in risk  management.  The project will train young farmers to provide risk  management assistance and provide instructional material and technology  to increase managerial skills in agricultural operations.  It will provide risk  management training for minority, limited-resource farmers, and migrant  workers in 134 Georgia counties and establish a certified risk management  program for farm workers.
Pacific Northwest Risk Management Education Project ($236,339) Grantee:  Washington State University The objective of this project is to help Pacific Northwest cereal grain  producers improve and apply risk management skills.  The project will  develop a research-based educational curriculum to increase  understanding of risk management tools and integrate areas of risk  management in a decision-making process for small grain producers.  The  project will deliver a producer-oriented risk management program to more  than 1,000 grain producers.
Risk Management Research and Education for the Florida Citrus Industry  ($19,172) Grantee:  University of Florida Cooperative Extension Service The objective of this project is to develop appropriate risk management  tools and strategies for citrus growers in 32 southern Florida counties.   This project will help growers to understand their increased exposure to  risk and to use risk management tools and strategies.
Risk Management Education:  A Risk-Management Club Approach  ($150,000) Grantee:  Kansas State University The objective of this project is to extend applied risk management  information to agricultural producers and agricultural businesses in  Kansas.  The project will establish local risk management clubs and survey  club members to determine risk perceptions, risk management skill levels,  and educational needs.  It will plan and conduct educational meetings, and  carry out follow-up evaluations to measure the effectiveness of the risk  management club approach.
Leveraging Risk Management Education Using Crop Insurance Agents  ($166,500) Grantee:  National Crop Insurance Services The objective of this project is to broaden the understanding of risk  management principles among more than 15,000 crop insurance agents  nationwide.  The project will train crop insurance agents in risk  management and foster a partnership involving extension specialists, crop  insurance agents, and socially disadvantaged and limited-resource farmers.   The project will begin a conference series on risk management modeled  after one in North Dakota.
Economic Performance and Producer Use of Market Advisory Service  Products ($250,000) Grantee:  University of Illinois Cooperative Extension Service The objective of this project is to provide producers of corn, soybeans, and  wheat with an objective, comprehensive evaluation of the economic  performance of crop market advisory services.  It will describe subscribers’  use of market advisory services, current risk management practices, and  the educational needs of crop producers.
Comprehensive Risk and Business Planning: A Case Plan Approach  ($106,841) Grantee:  University of Nebraska The objective of this project is to help producers and others in risk  management consulting and educational efforts understand comprehensive  business planning.  Participants will learn to prepare business plans for  each commodity to address various situations.  The project will encourage  producer groups to develop comprehensive risk management and business  plans, and will create and maintain an online forum on risk and financial  management.
Develop AgRisk 2000 ($206,150) Grantee:  University of Illinois Cooperative Extension Service The objective of this project is to develop and provide a comprehensive  risk management tool that which can be used by farmers, lenders, and  service providers to evaluate pre-harvest risk management strategies.  The  project is targeted at producers located in the Corn Belt, Wheat Belt, Delta  Region, and Southern States.
Risk Management Education for Limited-Resource Latino Family Farmers  in California's Central Coast ($85,000) Grantee:  Association for Community Based Education The objective of this project is to improve the risk management skills of  limited-resource Latino family farmers in California's central coast.  The  project will improve the farmers' capacity to understand the risk associated  with their business, analyze risks and use information in problem-solving  and decision-making, and incorporate risk management education into a  small-farm production and management curriculum.
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subsections: section_title: Official Business Penalty for Private Use $300