Analysis of Beef Producers' Risk Management Perceptions and Desire for Further Risk Management Education

Abstract

Beef cattle producers were surveyed in Texas and Nebraska to investigate perceptions of sources of risk, the effectiveness of risk management strategies, and interest in further risk management education, particularly production risk, using probit analysis. Important decision variables identified are age, prior use of risk management tools, previous attendances of risk management education, and risk aversion. Severe drought and cattle price variability are identified as primary risk factors with potential to affect farm income. Extremely cold weather and disease are of less importance. Understocking pasture and storing hay are perceived most effective as risk management options. I t is often assumed that the management of risk is of paramount importance to crop and livestock producers (Barry; Hardaker, Huirne, and Anderson). Yet, very little information is available on how livestock producers perceive and manage risk. In this paper, we present the results of a unique large-scale and broadly focused survey of beef producers' perceptions of risk and preferences for risk management. Information is offered on both production and, to a lesser extent, price risk. 1 The results presented offer insight into questions such as what type