AFM Risk Management & Crop Production Strategies 2

Question 1

A corn farmer wants to lock in a price for next season's harvest before planting. Which tool best accomplishes this objective?

Accepted Answer

Selling corn futures contracts

Answer

Selling futures contracts locks in a selling price for a future delivery date, protecting against price declines before harvest.

Question 2

Which crop rotation practice best reduces the risk of soybean cyst nematode buildup in continuous soybean production?

Accepted Answer

Rotating soybeans with corn every other year

Answer

Rotating soybeans with a non-host crop like corn interrupts the nematode life cycle and reduces soil population levels.

Question 3

A farm manager purchases an area yield insurance policy. Under this plan, an indemnity is triggered when:

Accepted Answer

The county average yield falls below the coverage trigger

Answer

Area yield (group risk) policies pay indemnities based on county-level yield shortfalls, not individual farm losses.

Question 4

Integrated Pest Management (IPM) contributes to risk management primarily by:

Accepted Answer

Reducing input costs while maintaining acceptable pest control

Answer

IPM balances economic thresholds and multiple control tactics to minimize unnecessary pesticide use while protecting yield.

Question 5

Which federal crop insurance product pays an indemnity based solely on the number of prevented planting or qualifying loss days, regardless of actual yield outcome?

Accepted Answer

Rainfall Index (RI)

Answer

Rainfall Index insurance uses NOAA precipitation data for a geographic grid and pays when rainfall falls below a coverage level, independent of actual farm yield.

(AFM) Accredited Farm Manager Certification Practice Test

(AFM) Accredited Farm Manager Certification Practice Test

AFM Risk Management & Crop Production Strategies 2