Meet the Expert
Cory Walters PhD
Assistant Professor, University Of Nebraska - Lincoln
- Focus on the use of public (futures markets) and private (crop insurance) risk management tools to manage farm revenue risk.
- Investigates policy-important areas of federal crop insurance, fertilizer decisions, and environmental quality.
- President of a family-owned grain farm Montana producing wheat, canola, barley, and peas.
Meeting Packages from $500
Your Meeting Package Includes:
- All 7 Best Practices
- Pre-Meeting Discovery Process
- One-on-One Call with Expert
- Meeting Summary Report
- Post-Meeting Engagement
Agriculture Insurance, Futures and Options for Optimal Farmer Decision Making
Assistant Professor, University Of Nebraska - Lincoln
Defined Terms
- APH
- Actual production history. This is a measure used by the USDA's Risk Management Agency as the baseline to determine coverage for per-acre losses for a specific commodity.
- CFTC
- Commodity Futures Trading Commission, a federal agency that oversees and regulates futures trading in the U.S.
- ETF
- Exchange-traded fund, an investment fund traded on stock exchanges much like individual stocks. These funds normally are based on a stock market index. For agricultural commodities, they may be linked, for example, to an index that tracks futures prices for multiple grains.
- Farm Bill
- The common name for an omnibus piece of federal legislation relating to agriculture, food and forestry policies, programs and subsidies. It is rewritten by Congress every five years.
- Farm Business Farm Management Association (FBFM)
- A collaboration of organizations in Illinois, Kentucky and Kansas that provides farm production and finance benchmarking information to farm producers.
- Farm Services Agency
- The U.S. Department of Agriculture agency that administers such programs as farm loans, the conservation reserve and other commodity subsidies and programs.
- FINBIN
- A farm financial database operated by the Center for Farm Financial Management at the University of Minnesota. It provides benchmark financial information for farm producers, educators, lenders, and other agricultural professionals for several states across the Midwest.
- Futures
- A financial contract that obligates one to either buy or sell a set amount of a commodity at a set price at a future time. Such contracts generally are traded on the floors of such exchanges as the Chicago Board of Trade.
- Hedging
- A strategy used by commodity producers or buyers to "lock in" prices with the intent of ensuring adequate margins while minimizing risk. This is done by taking a position in the futures market to offset anticipated cash sales or purchases. A producer, for instance, might sell futures contracts of corn for part of the expected production. If the cash price for corn at harvest is low, the higher price has been locked in by the futures contracts. Should the cash price rise, the producer may be limited on the total that can be earned, but is secure in knowing that a profit was, at least, guaranteed and that the higher price may be received for a portion of the crop.
- Land-grant university
- An educational institution that is part of a loosely connected national system that was created in the late 1800s through land grants from Congress to provide technical education in engineering, agriculture and military sciences. Most institutions today are major public universities in their respective states.
- Options
- An option contract grants the right (but not the obligation) to buy or sell a specific amount of a given commodity at a specified price during a set period of time. Exercising a buy is a call option. Selling is known as a put option. Put options normally are used by producers as a form of protection against price fluctuations because risk is limited to the price of the option (called the premium) when the option is offered against grain stocks owned or produced.
- Risk Management Agency
- A U.S. Department of Agriculture agency that administers risk mitigation programs for agriculture producers, including the federal crop insurance program.
- Short sale
- A strategy in commodities futures and exchange-traded funds in which a producer or investor will sell a contract for grain in the expectation that prices will drop. When a contract is bought later at a lower price – presuming the seller correctly guessed the market direction – it covers the sale and the difference is realized as profit.
- WASDE
- World Agriculture Supply and Demand Estimates, a monthly report produced by the U.S. Department of Agriculture that examines global supply and demand factors for several crop and livestock categories.
- YA (yield adjustment) option
- An option in federally subsidized crop insurance in which a farm's annual production history is calculated on a minimum of 60 percent of average countywide yield. This is a calculation that helps maintain expected yields for an individual farm at higher levels, which supports insurance payouts over time because losses are calculated against yield expectations.
Agriculture Insurance, Futures and Options for Optimal Farmer Decision Making:
Defined Terms
Expert Topic