Iowa Farming: Evolving Risk and Risk Management

A prominem Iowa row-crop producer recently commented, There isn\u27t much risk to crop farming in Iowa today. Considering the floods of 1993, below nonnal yields in 1995, the changes in the federal farm income safety net, not to mention recent price volatility, this statement sounds odd at first glance. However, given the variety of marketing and risk management tools available, and the existing market conditions, midwestern farmers who manage carefully can hedge a great deal of shon run risk in a CQSt effective manner. Alternatively, livestock producers may be finding increasing risk due to volatile feed costs and weak market conditions. In this column we delineate basic risk management approaches, discuss how changes in market conditions affect performance of management instruments, and provide a summary overview of what the future might hold