Simulated Western Kentucky Grain Farm Cash Flows, Working Capital Erosion, and Evaluation of Risk Management Tools to Manage these Risks

A stochastic simulation model is used to evaluate the profitability and liquidity of a low cost / low debt and high cost / high debt Western Kentucky corn-soybean farm over a five-year period. The model evaluates the effectiveness of crop insurance, government programs, and cash-forward contracts risk management tools and the impact on liquidity and profitability.