NEW INPUT AND OUTPUT RISK MANAGEMENT STRATEGIES FOR LIVESTOCK PRODUCERS

Backgounding beef cattle is an inherently risky venture. Producers face production risks as well as marketing risks. If a backgrounding operation is to be viable, these risks should be addressed and effectively managed. While some effective risk management tools are currently available to livestock producers, some other potentially useful risk management tools, for various reasons, have been previously unavailable. Two such tools which could help livestock producers achieve the overall goal of managing net income risk are a program for managing feed ingredient nutrient and price variability in the selection of minimum cost feed rations and government subsidized livestock price insurance. Due to lack of data and limited computational power of solvers, risk has seldom been introduced into the feed ration selection process. Presently, both feed ingredient nutritional data and appropriate solvers are available, allowing for risk to be fully considered in this decision-making process. Only recently has there been policy efforts to establish subsidized price or revenue insurance for livestock producers. The introduction of such insurance to livestock producers offers potential risk managemen