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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
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
Office 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.