FARGO, N.D. — November 2025 — The Agricultural Risk Policy Center (ARPC) at North Dakota State University participated in the Fall 2025 National Bureau of Economic Research (NBER) Conference on Risk and Risk Management in the Agricultural Economy, where ARPC Senior Economist Yifei Zhang presented the team’s latest study, Real Subsidy, Elusive Harvest: Timing, Frictions, and the Economics of Livestock Risk Protection Arbitrage.

Co-authored by Dr. Yifei Zhang, Dr. Andrew Keller, Dr. Shawn Arita, and Dr. Sandro Steinbach, the paper examines whether premium subsidies in USDA’s Livestock Risk Protection (LRP) program create opportunities for “subsidy harvesting,” a strategy that pairs subsidized LRP endorsements with offsetting CME options. Using national endorsement-level data merged with contract-level CME option prices, the study finds that LRP endorsements cluster sharply around option expiration dates but that apparent arbitrage margins disappear once real-world trading frictions, margins, and basis risk are accounted for.

“Our findings show that while timing patterns resemble arbitrage, the economics tell a different story,” Zhang said. “Once you incorporate realistic transaction costs, financing, and settlement mechanics, LRP alone provides the strongest welfare outcome for producers. What appears to be arbitrage is instead driven by institutional timing and program design.”

The NBER conference brought together leading researchers and policymakers to discuss emerging issues in agricultural risk. ARPC’s contribution reflects the center’s commitment to delivering evidence-based insights that inform program design, producer behavior, and federal risk-management policy.

🔗 Watch the conference presentation (starting at 1:05:11):
https://www.youtube.com/watch?v=C7zDNGV40m0&t=3911s

Media Contact:
Yifei Zhang — yifei.zhang.2@ndsu.edu
Agricultural Risk Policy Center (ARPC)
North Dakota State University
www.ndsu.edu/agriculture/arpc