Recipient Organization
UNIV OF IDAHO
875 PERIMETER DRIVE
MOSCOW,ID 83844-9803
Performing Department
(N/A)
Non Technical Summary
Dairy producers face greater and more risk than many businesses due to longer capacity building lead time and a continuous production cycle. Moreover, price volatility has been historically high making it difficult for dairy producers to maintain stable margins, especially small and mid-size operations. The goal of our research is to assess how dairy producers of all sizes and types perceive risk, identify barriers that keep them from adopting risk management tools, and evaluate and optimize margin protection strategies that result in more stable profits to improve economic viability.Objectives include: 1) determine dairy producers' attitudes and perceptions of risk and risk management practices; 2) identify portfolios of risk management strategies tailored to different types of producers; and 3) assess the efficacy of the strategies on margin management plans for varied types of dairy producers.We will survey dairy producers regarding how they perceive and interact with market risk. We will use structural equation modeling to estimate the antecedents to adoption of risk management practices. Based on the outcomes, a panel of experts will help build a portfolio of risk management practices for margin protection. Ultimately, through simulation, we will test the efficacy of these portfolios by producer type to determine tailored risk management practices that best fit different types of dairy producers.Our project supports the Economics, Markets and Trade Program Priority of competitiveness in domestic markets. Specifically, we focus on the priority scope of price stabilization and income support in the dairy industry.
Animal Health Component
100%
Research Effort Categories
Basic
(N/A)
Applied
100%
Developmental
(N/A)
Goals / Objectives
Our long-term goal is to increase and improve implementation of risk management strategies by dairy producers using tools tailored to their environment and circumstances while enhancing their overall understanding of risk management practices, risk behavior, and decision making. Our project goal is to set a baseline of risk management practices and how best to position them with dairy producers to increase adoption and use. Achieving this goal will assist dairy producers of all sizes in their ability to succeed at becoming economically viable and sustainable in the increasingly volatile agriculture industry.Objective 1: Determine dairy producers' attitudes and perceptions of risk and risk management practices.Objective 2: Build a portfolio of risk management strategies designed to manage risks associated with dairy industry markets.Objective 3: Assess by producer type the efficacy of risk management strategies towards protecting profitability.Research findings will advance the field of risk management and ensure a greater chance of economic success for dairy producers nationwide. Completion of these objectives will assist our nation's dairy producers in mitigating the possibilities of bankruptcy through using the best risk management strategies that fit their situation. A by-product of this research will be increased empirical evidence regarding risk attitudes of dairy producers across the country and the increased understanding of economic effects of different risk management strategies. The latter will aid the ability of advisors, extension specialists, and influencers to promote tailored risk management strategies for adoption by dairy producers.
Project Methods
We will accomplish these objectives through three phases of work. Phase 1 will capture dairy producers' attitudes, perceptions, and practices related to risk management (in general), along with the requisite demographic information. Phase 2 will use Phase 1 results to seed an interaction with a panel of experts/industry advisor types and, through an iterative process, build a set of preferred risk management strategies. In Phase 3, these risk management strategies will be compared across dairy producer types identified in Phase 1. By using simulated outcomes based on historical industry activity, the performance efficacy of each strategy will be quantified and statistically compared for each producer type.