Producer Experience, Learning by Doing, and Yield Performance
AbstractCurrent crop insurance rating procedures consider only performance for the individual crop in question. Recent farm legislation has given producers considerable planting flexibility and, as a result, many have shifted to new crops. Producers without a production history for the new crop may be offered levels of insurance that do not accurately reflect their expected yields. Likewise, premium rates may not reflect a producer's actual risk for a new crop. We examine the extent to which information about expected yields may be gleaned from a consideration of historical performance on other crops. We also consider the extent to which yield performance exhibits learning by doing such that yields improve with experience. Though the results are mixed, we generally find that yield performance tends to improve with experience. However, when yields are conditioned on historical yield performance for other crops, the importance of experience is diminished significantly. Yield performance is related to a number of farm characteristics. Finally, we examine the extent to which yield variability is correlated across crops for individual farmers. Implications for crop insurance rating practices are discussed. The results demonstrate robust correlation between a farm's historical yield on other crops and a newly produced crop—a factor largely ignored in current crop insurance contracts. Copyright 2002, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 84 (2002)
Issue (Month): 3 ()
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- Goodwin, Barry K. & Mishra, Ashok K., 2002. "An Empirical Evaluation Of Yield Performance And Cross-Crop Yield Correlation," 2002 Annual Meeting, July 28-31, 2002, Long Beach, California 36550, Western Agricultural Economics Association.
- Urcola, Hernan A. & Schnitkey, Gary D. & Irwin, Scott H. & Sherrick, Bruce J., 2004. "Testing for Yield Persistency: Is It Skill or is It Luck?," 2004 Annual meeting, August 1-4, Denver, CO 19991, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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