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Corn+Soybean Digest

Manage To Reduce Risk

Since passage of NAFTA (North American Free Trade Agreement), modifications in GATT (General Agreement on Tariffs and Trade) and U.S. legislation passed in 1996, U.S. soybean growers have faced new economic challenges.

These new policies have propelled the global ag economy into a more market-oriented environment with fewer government safety nets. Also, the U.S. government is less involved in stabilizing oilseed and grain prices.

At the same time, researchers from Iowa State University (ISU) and Ohio State University (OSU) see evidence of global climate changes. These climate changes may produce greater year-to-year variability in U.S. and world soybean yields.

This combination of climate and policy changes has moved U.S. soybean producers into a marketing environment where price risk and weather risk are higher than in the past.

That's why ISU and OSU researchers worked with a task force from six land-grant universities and two private firms to create Managing Risk and Profits (MRP).

This educational program consists of a book that focuses on diverse topics such as global climatic changes, financial management principles, legal considerations in contracting, crop yield, revenue insurance and other topics. In addition, they developed accompanying software to help farmers develop risk-management plans and to ask "what if" questions.

The program focuses on measuring risks for different financially structured farms and whether preharvest pricing strategies add profit while limiting risk.

The risk management program is available on CD for $25 or as a book for $15. To order, contact Dean Baldwin, Dept. of Ag Economics, Ohio State University, 2120 Fyffe Rd., Columbus, OH 43210; phone 614-292-0491.

(Robert Wisner, Iowa State University; E. Dean Baldwin and E. Neal Blue, Ohio State University)

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