AgRisk

About AgRisk

AgRisk is a user-friendly, Windows program designed to assist corn, soybean, and wheat farmers to manage harvest-time revenue risk.  AgRisk was developed by Mario Miranda of The Ohio State University and Gary Schnitkey and Scott Irwin of the University of Illinois with funding provided by The Risk Management Agency, U.S. Department of Agriculture. 

AgRisk predicts the distribution of a farm's gross revenue at harvest time under different pre-harvest risk management strategies that may involve any combination of multiple peril crop insurance, crop revenue protection insurance, group risk plan insurance, price options and futures, and various pricing contracts offered by elevators and processors, including forward price and minimum price contracts. By comparing how gross revenue distributions vary across different risk management strategies, a farmer will be better informed about his or her crop revenue risk management options, thereby leading to improved risk management decisions.

A user initially enters two types of information into the AgRisk graphical interface, which are used to build a model of the harvest time farm gross revenue probability distribution:

• Farm information, including the county the farm is located in, acres planted in various crops, and farm-level yield histories for each crop.
  
• Current market information, including futures and option prices from the Chicago Board of Trade for the crops grown on the farm.

The user then accesses AgRisk's "what-if" section. Here the user can compare the effects of different risk management strategies on the farm's gross revenue distribution. For example, a user could see how purchasing put options in combination with crop insurance compares to buying Crop Revenue Coverage insurance alone. For each strategy examined, the user must specify the number and types of risk management contracts entered for each crop, and related contract information such as premiums paid, coverage levels, and forward, futures, and strike prices, as applicable.

AgRisk summarizes the effects of alternative risk management strategies on harvest-time revenue using a combination of graphical and statistical formats. For each strategy entered by the user, AgRisk predicts the expected gross revenue and computes value at risk measures, which indicate the probability that revenue will fall bellow certain thresholds. AgRisk also prints the cumulative probability distribution of gross farm revenue and, when defined, the associated probability density.

AgRisk is distributed as freeware. Copies of AgRisk are available freely via the Internet or by direct order from The Ohio State University for the cost of copying and postage.

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Last Updated on May 10, 2001.