Do large farms make better choices: Evidence from dairy margin coverage program participation patterns

Abstract

Risk management has been a centerpiece of the US farm policy since the Agricultural Act of 2014. We study the Dairy Margin Coverage (DMC) program utilizing a unique operation-level participation data. By investigating the participation and the choice decisions of the dairy operations in US, we find that larger operations are more likely to participate in DMC and also to make margin coverage choices that maximize the net returns.