Government Business Risk Management (BRM) Program Participation and the Threshold Effects of Repayment on Farm Survival

Research Lead: Dr. Alfons Weersink , University of Guelph

Executive Summary

Many Business Risk (BRM) programs are available to farm operators as instruments to protect themselves from income fluctuations (such as AgriStability and AgriInsurance, etc.) Yet, participation in these programs by Ontario farmers have been low and falling over the years.  In order to find out why, this project aims to investigate: (1) how farmers value the programs as risk management instruments and behaviourally choose to enrol in/withrdraw from the programs as responses to their dynamic financial streams and business status over years; (2) the effectiveness of the BRM programs in income smoothing and the role they played in shaping business strategies of Ontario farmers in the long-run.  This project involves using the Ontario Farm Income Database (OFID) from 2003-2012 and Framer Field Experiments to conduct analysis on BRM program adoption and effiency.  The “break-even” conditions at which the cost of program premiums equals their payouts will be assessed via simulation model.  The study provides the industry operations with a deeper understanding on how BRM programs affect business performance in Ontario.  The study will also she light on how BRM program settings can generate variations in the participation deciison and the program efficiecny among relevant farms.  

Completed: 2017

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