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This study evaluates the Adjusted Gross Revenue-Lite (AGR-Lite) whole-farm adjusted gross revenue insurance program on net farm income risk using panel data from 49 southeast Kansas beef farms. On average for the group, but not each individual farm, AGR-Lite reduces the mean and standard deviation of net farm income, raises the average minimum, and lowers the average maximum observations of the net income distribution. Thirty-four farms (69%) received at least one indemnity payment. Stochastic efficiency with respect to a function reveals that AGR-Lite is preferred by 18 of the farm managers (37%) when an upper bound on the risk-aversion coefficient is used.

This study compares the effectiveness of two crop insurance and two disaster assistance program designs used in conjunction with a government commodity program and a linked crop insurance/government commodity program design. Stochastic dominance analysis of farm-level net return distributions is used to select the preferred design(s). The results indicate that the disaster assistance programs are preferred over the alternatives. The results also suggest that individual crop insurance is preferred to area crop insurance. A subsidy is required for risk-averse managers to prefer area crop insurance to individual crop insurance.

The impact of the government commodity program, crop insurance, disaster aid, and optional paid land diversion on net return risk for corn and soybeans is examined. Results indicate that most preferred risk management strategies include crop insurance for corn in northeast Kansas whether disaster aid is available or not. Crop insurance for soybeans is generally not preferred. Participation in the optional paid diversion program is a preferred risk management strategy for extremely risk averse producers. Willingness to pay analysis indicates that moderately and strongly risk averse producers would be willing to pay more for crop insurance when disaster aid and the optional paid land diversion for corn are not available. Risk averse corn producers would be willing to pay more for crop insurance than disaster aid as well.

Stochastic dominance analysis of two tillage systems, conventional tillage and no-tillage, for five crop rotations, wheat-fallow, grain sorghum-fallow, continuous wheat, continuous grain sorghum, and wheat-grain sorghum-fallow, shows that risk-averse managers prefer a conventional tillage wheat-sorghum-fallow system. Small changes in production costs or yields lead to indifference between this system and the no-tillage wheat-sorghum-fallow and no-till and conventional wheat-fallow systems. Participation in the basic government commodity program generally increases average net returns and lowers variation of returns. Government commodity program payments calculated under a variety of scenarios do not generally encourage the use of no-till practices for grain sorghum and wheat in the central Great Plains.

To test the effectiveness in managing net income risk and profit levels, pre-harvest corn and soybean options-based pricing strategies and crop yield and revenue insurance products were modeled for case study farms in three states. These combinations reduced income variability while increasing net incomes relative to harvest cash marketings. Adding crop insurance to pre-harvest pricing strategies reduced net incomes from those with pre-harvest pricing alone, but produced larger incomes than uninsured harvest sales. The Ohio model farm was modified to reflect (1) a debt-free operation, (2) a cash renter, and (3) a buyer-renter operation. No strategy was able to cover opportunity costs on investments for types (1) and (3). Both crop insurance and pre-harvest strategies are effective tools especially for highly leveraged farms.