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Master of Agribusiness

Lauver Family Farms: Utilizing the Conservation Reserve Program as a Risk Management Tool

Andrew Lauver, Rockwell City, Iowa, defended his thesis, “Lauver Family Farms: Utilizing the Conservation Reserve Program as a Risk Management Tool”. He is the Sales Promoter/Encirca Certified Services Agent for DuPont Pioneer. Lauver will be a spring graduate from Kansas State University with a Master of Agribusiness (MAB) degree.

The Lauver Family Farm in Rockwell City, Iowa, was started in 1945. The farm consists of row crops and wetland, along with acreage enrolled in the Conservation Reserve Program (CRP) in 2002. By taking acres out of production for at least 10 to 15 years that perennially drown due to often wet soil conditions, they have been able to use the CRP as a risk management tool. Now, Lauver Family Farms is faced with a decision to determine if a 10 or 15-year re-enrollment of those acres in the CRP will generate the greatest economic and environmental return, since the current enrollment expires in 2016.

“Given the state of the current agricultural economy, producers must continually search for avenues to minimize risk and diversify, while increasing profitability in a challenging economic environment. Through my research, it was discovered that long term profitability remains high on marginal acres enrolled in the conservation reserve program, while enhancing environmental sustainability through a voluntary approach,” Lauver said.

The model created by Lauver provides information to support and aid in the decision making process for enrolling in the Conservation Reserve Program or land conversion to grain production for Lauver Family Farms. The model includes the relationship between long-term profits from crop production, soil productivity, land conversion, opportunity cost of the Conservation Reserve Program and Conservation Reserve Program payments over the period of enrollment.

Dr. Christine Wilson, Professor of Agricultural Economics and Lauver’s thesis advisor, said, “Farm management decisions are challenging, and making well-informed decisions is critical for profitability and risk management.  Andrew’s research examined the strategic decision of enrollment in the conservation reserve program for his family’s farm operation.  His thorough analysis of decision options and their payoffs provided clear and valuable guidance in the decision-making process for the operation.”

The full thesis publication can be found online on Kansas State University’s Research Exchange at http://hdl.handle.net/2097/34572.