Using panel data from Illinois grain farmers, a direct test of the relationship between income risk and farm consumption behavior is conducted. The estimation results indicate that income risk significantly affects farm consumption and the results are robust using alternative risk measures. This...

Generic income stabilization schemes, which resemble an actual NISA policy adopted recently in Canada, encourage farmers to set aside funds in high income year for use in low income years through a formal procedure. Their economic effects are investigated using the prudent farm household model....