Senate Agriculture Committee Chairman Richard Lugar (R-IN) wants an aggressive campaign launched to educate farmers on available risk management tools.  He cites as a need for such education a Commodity Futures Trading Commission pilot program on agricultural trade options, intended to help farmers manage risk, that was initiated a year ago.  No one yet has signed up to participate.

“Numerous sophisticated farmers have testified before this committee about the complexity in learning about options available to them to manage their risk,” said Lugar.  “Last month’s risk management roundtable brought out the fact that only one-fifth of all farmers use the futures and options exchanges to hedge volatility in commodity prices.  Although these percentages improve with the size of the farming operation, I believe these figures should be higher.

“If farmers are not educated about or aware of a risk management program available to them, then the participation level will be low and the program will not work effectively.  It is important that all farmers are provided with the resources needed to make sound marketing decisions,” he added.

Excessive regulatory requirements and lack of education about the program are reasons cited for the lack of participation in the CFTC pilot options program.