UTIA Receives Grant To Analyze And Develop Price Risk Management Tools

UTIA Receives Grant To Analyze And Develop Price Risk Management Tools
Aug 19, 2022

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Beef cattle producers are all too familiar with economic losses stemming from uncontrollable events such as drought and disease; however, losses due to rapid price declines have historically been the primary source of economic losses for U.S. cattle producers. While studies have shown price risk management tools can be effective in reducing price-decline losses, these tools are seldom used, especially by producers with small- and medium-sized operations. In an effort to improve the economic sustainability of these producers, a University of Tennessee Institute of Agriculture research team has been awarded a $650,000 grant to explore innovative price risk management tools and ultimately help producers make informed and effective risk management decisions.

The researchers will conduct a national survey of beef cattle producers to identify barriers to adopting price risk management tools, assess perceptions of tool effectiveness, and learn how these tools could be changed to be more usable — the first known study to ascertain this vital information.

Survey results will inform the data-driven development of a free mobile application containing information needed for making informed and effective risk management decisions. The long-term goal of this project is to improve U.S. beef cattle producers’ economic sustainability through research on and education of price risk management, especially for producers with small- and medium-sized operations.

“We are thankful for the opportunity to ask U.S. beef cattle producers about ways to help them reduce losses from sudden price declines,” said Chris Boyer, associate professor and lead researcher in the Department of Agricultural and Resource Economics. 

The three-year grant is funded by USDA’s National Institute of Food and Agriculture, which provides leadership and funding for programs that advance agriculture-related sciences. Hongwei Xin, dean of UT AgResearch, praised the researchers for focusing their efforts on tools that will help small- and medium-sized operations. “These ranchers are the backbone of the U.S. beef economy,” he said. “Anything we can do to help their profitability helps all U.S. producers and consumers.”

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