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About Risk Management Education

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Farmers today face a new risk management environment drastically different from that which existed just a few years ago. U.S. producers need new and improved risk management tools and the knowledge to use these tools correctly. RME has established comprehensive risk management education and outreach opportunities for customers to enable producers to effectively manage their risks.


The mission of Risk Management Education (RME) is to lead a comprehensive educational program that assists producers and agribusinesses in understanding their increased risk exposure and responsibility in the current economic environment; to understand and make effective use of risk management tools and strategies, and to integrate these strategies in decisionmaking that enables them to meet business, personal and community goals.


This RME initiative represents a joint effort with the Commodity Futures Trading Commission (CFTC), USDA's Cooperative State Research, Education and Extension Service (CSREES), and the USDA National Office of Outreach. It relies heavily on the involvement of private sector entities interested in educating farmers about risk management strategies and tools.


Congress mandated the RME initiative through legislation in Section 192 of the Federal Agricultural Improvement and Reform (FAIR) Act of 1996, and in support of the Secretary of Agriculture's education initiative. The FAIR Act of 1996 establishes a framework for ongoing activities that mutually support RMA's missions and responsibilities. Section 192 provides that:

"In consultation with the Commodity Futures Trading Commission, the Secretary shall provide such education in management of the financial risks inherent in the production and marketing of agricultural commodities as the Secretary considers appropriate. As part of such education activities, the Secretary may develop and implement programs to facilitate the participation of agricultural producers in commodity futures trading programs, forward contracting options, and insurance protection programs by assisting and training producers in the usage of such programs. In implementing the authority, the Secretary may use existing research and extension authorities and resources of the Department of Agriculture."

Section 194 of the 1996 Act provides that the RMA Administrator is also the Manager of the Federal Crop Insurance Corporation (FCIC). FCIC is authorized by the Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq.). FCIC is a wholly government-owned corporation within RMA, whose purpose is to promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance. The 1996 Act removed or curtailed most traditional risk management programs, such as the price support program, previously offered by USDA. To help fill the gap, Congress authorized an education program which trains producers in the use of futures, options, crop insurance,and other risk management tools through which producers can manage their own risks.

RMA has been designated as the lead agency to develop and implement this education program in coordination with other agencies of the Government. As authorized by Section 192 of the 1996 Act, RMA will utilize the expertise of CFTC, which develops, establishes, and maintains research and informational programs regarding futures trading for dissemination and use among producers, market users, and the general public; CSREES, which is the educational arm of USDA and is responsible for developing and conducting research, higher education and extension programs to provide knowledge and technical assistance to the general public; and the USDA National ffice of Outreach, which ensures that underserved producers have adequate access to educational opportunities.

Memorandum(s) of Understanding

RMA, CSREES, CFTC, and USDA's National Office of Outreach (NOO) entered into a Memorandum of Understanding (MOU) effective May 22, 1998. This MOU modifies the original document which was effective April 8, 1997.

The MOU will continue in effect until canceled by any one of the parties in accordance with Article 6. The MOU outlines the respective responsibilities of RMA, CSREES, CFTC, and NOO with respect to the Secretary of Agriculture's RME initiative to provide education in management of the financial risks inherent in the production and marketing of agricultural products.