Should I use risk management tools? Evaluate your financial risk

Abstract

With the volatility in milk prices this year, many questions have been asked by dairy producers about whether or not they should use available tools to potentially minimize the risk associated with negative milk price moves. As producers think about this question, evaluating and understanding the financial risk of the business is one area to evaluate. Higher financial risk can indicate that it is important to manage milk price risk but will not tell you how or how much management is required.