Preference for Risk Management Information Sources: Implications for Extension and Outreach Programming

By Rejesus, Roderick M.; Knight, Thomas O. et al. | Agricultural and Resource Economics Review, April 2008 | Go to article overview

Preference for Risk Management Information Sources: Implications for Extension and Outreach Programming


Rejesus, Roderick M., Knight, Thomas O., Jaramillo, Mauricio, Coble, Keith H., Patrick, George F., Baquet, Alan, Agricultural and Resource Economics Review


This article examines farmers' preferences for various risk management information sources. Our results suggest that information from risk management experts, in-depth materials studied on their own, and popular press outlets tend to be preferred and are ranked highly by producers. Using a regression model to investigate farmer/farm attributes that affect preference for a particular risk management information source, we find that younger farmers with college education, higher leverage, assets greater than $1 million, risk-loving attitudes, and who have used professional services (marketing consultants) tend to prefer information from risk management experts, the Internet, and marketing clubs/other producers. On the other hand, producers who prefer self-study of educational materials and popular press information sources tend to be younger, with lower leverage levels, and have used fewer professional services.

Key Words: crop insurance, extension, information sources, outreach, risk management

One of the key characteristics of agriculture is the high level of production, market, and financial risks faced by producers. The presence of these risks has spurred development and availability of different agricultural risk management tools that help provide an income safety net for U.S. crop producers. To reduce production and/or marketing risks, for example, a producer has the option of using several risk-reducing instruments or strategies such as yield- or revenue-based crop insurance, futures hedging, and forward contracting. Each of these risk management tools has inherently different characteristics that make it more suited for particular crops, particular geographical areas, and/or particular farm business situations. Given the variety of risk management tools available, it is important, from a management perspective, for farmers to be aware of and understand the attributes of those alternative riskreducing instruments. A better understanding of the different risk management tools available allows producers to more effectively choose the most appropriate risk management strategies for their own business situation (Schnitkey, Irwin, and Sherrick 2004).

Given producers' need to learn about alternative risk management tools, understanding the information sources that they rely on for learning is important. In the agricultural economics literature, there have been a number of studies that investigate farmers' preference for information sources that can be used for general farm business decision making (see Schnitkey et al. 1992, Ortmann et al. 1993, Patrick and Ullerich 1996, Gloy, Akridge, and Whipker 2000). Most of these studies have tried to empirically uncover relationships between farm/farmer characteristics and usefulness of (or preference for) different information sources. For overall farm decision making, these previous studies find that farm magazines are typically the most useful information source, and that farm size, farming experience, computer use, and farming enterprise type tend to strongly influence preference for particular information sources.

Note that the studies mentioned above examined preferences for information sources in the context of general farm decision making, not risk management decisions in particular. The literature on agricultural risk management includes a number of studies that have primarily focused on producers' demand for risk management education (Coble et al. 1999, Patrick et al. 2000, Vergara et al. 2002, Hall et al. 2003, Knight et al. 2003). These studies did not focus on information sources per se that can be used to deliver risk management educational programs. Knight et al. (2003), for example, examined only factors affecting crop producers' demand for more education about the following risk management tools: forward contracting, futures and options, crop yield insurance, crop revenue insurance, and general financial management. Hall et al. (2003) specifically examined factors that influence livestock producers' demand for more risk management education. …

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