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Factors Influencing Farmers' Crop Insurance Decisions

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Author Info

  • Bruce J. Sherrick
  • Peter J. Barry
  • Paul N. Ellinger
  • Gary D. Schnitkey
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    Abstract

    Farmers' decisions to purchase crop insurance and their choices among alternative products are analyzed using a two-stage estimation procedure. The influences of risk perceptions, competing risk management options, as well structural and demographic differences are evaluated. The likelihood for crop insurance usage is found to be higher for larger, older, less tenured, more highly leveraged farms, and by those with higher perceived yield risks. The marginal effects of size, age, perceived yield risk, perceived importance of risk management activities, and other structural and demographic variables are identified in terms of their influences on choices among alternative crop insurance products. Copyright 2004, Oxford University Press.

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    File URL: http://hdl.handle.net/10.1111/j.0092-5853.2004.00565.x
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    Bibliographic Info

    Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

    Volume (Year): 86 (2004)
    Issue (Month): 1 ()
    Pages: 103-114

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    Handle: RePEc:oup:ajagec:v:86:y:2004:i:1:p:103-114

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    Cited by:
    1. Paulson, Nicholas D., 2010. "An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans," Staff General Research Papers 31523, Iowa State University, Department of Economics.
    2. Geoffroy Enjolras & Patrick Sentis, 2008. "The main determinants of insurance purchase. An empirical study on crop insurance policies in France," Working Papers 08-06, LAMETA, Universtiy of Montpellier, revised Apr 2008.
    3. Dhanireddy, Pavan Kumar Reddy & Frisvold, George B., 2012. "Disaster Assistance and Crop Insurance Participation in US," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124720, Agricultural and Applied Economics Association.
    4. MacNicol, R. & Ortmann, Gerald F. & Ferrer, Stuart R.D., 2008. "Management decisions on commercial sugarcane farms in KwaZulu-Natal: a focus on choice bracketing behaviour for risk management," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(1), March.
    5. Du, Xiaodong & Hennessy, David A. & Feng, Hongli, 2013. "A Natural Resource Theory of U.S. Crop Insurance Contract Choice," Staff General Research Papers 36751, Iowa State University, Department of Economics.
    6. Diego Arias & Katia Covarrubias, 2006. "Seguros agropecuarios en Mesoamérica: Una oportunidad para desarrollar el mercado financiero rural," IDB Publications 50218, Inter-American Development Bank.
    7. Lee, Dong Won & Diersen, Matthew A. & Janssen, Larry & Gustafson, Cole R., 2006. "Premium Subsidy Changes and Demand for Crop Insurance," Proceedings: 2006 Agricultural and Rural Finance Markets in Transition, October 2-3, 2006; Washington, DC 133086, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    8. Capitanio, F. & Adinolfi, Felice & Di Pasquale, J. & Contò, F., 2013. "¿Cuáles son los determinantes de la demanda de seguros agrícolas en Italia?," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 13(1).
    9. Nganje, William E. & Hearne, Robert R. & Orth, Michael & Gustafson, Cole R., 2004. "Using Choice Experiments To Elicit Farmers Preferences? For Crop And Health Insurance," 2004 Annual meeting, August 1-4, Denver, CO 20357, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Ogurtsov, Victor A. & Van Asseldonk, Marcel A.P.M. & Huirne, Ruud B.M., 2006. "Factors Explaining Farmers' Insurance Purchase in the Dutch Dairy Sector," 99th Seminar, February 8-10, 2006, Bonn, Germany 7774, European Association of Agricultural Economists.
    11. Heidelbach, Olaf, 2007. "Efficiency of selected risk management instruments: An empirical analysis of risk reduction in Kazakhstani crop production," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 40, number 92323.
    12. Diego Arias & Katia Covarrubias, 2006. "Agricultural Insurance in Mesoamerica: An Opportunity to Deepen Rural Financial Markets," IDB Publications 36538, Inter-American Development Bank.
    13. M.A.P.M. van Asseldonk & H.B. van der Veen & H.A.B. van der Meulen, 2010. "Retirement planning by Dutch farmers: rationality or randomness?," Agricultural Finance Review, Emerald Group Publishing, vol. 70(3), pages 365-376, November.
    14. Vedenov, Dmitry V. & Power, Gabriel J., 2008. "Risk-Reducing Effectiveness of Revenue versus Yield Insurance in the Presence of Government Payments," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(02), August.
    15. Robert Finger & Niklaus Lehmann, 2012. "The influence of direct payments on farmers’ hail insurance decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 343-354, 05.
    16. Egelkraut, Thorsten M. & Garcia, Philip & Pennings, Joost M.E. & Sherrick, Bruce J., 2006. "Producers' Yield and Yield Risk: Perceptions versus Reality and Crop Insurance Use," 2006 Annual meeting, July 23-26, Long Beach, CA 21369, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Finger, Robert & Lehmann, Niklaus, 2011. "Do Direct Payments Influence Farmers' Hail Insurance Decisions?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114355, European Association of Agricultural Economists.
    18. Sporri, Martina & Barath, Lajos & Bokusheva, Raushan & Ferto, Imre, 2012. "The Impact of Crop Insurance on the Economic Performance of Hungarian Cropping Farms," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122525, European Association of Agricultural Economists.
    19. Xiaodong Du & Hongli Feng & David A. Hennessy, 2014. "Rationality of Choices in Subsidized Crop Insurance Markets," Center for Agricultural and Rural Development (CARD) Publications 14-wp545, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    20. Phelippe-Guinvarc'h, Martial V. & Cordier, Jean E., 2006. "A private management strategy for the crop yield insurer: A theoretical approach and tests," Insurance: Mathematics and Economics, Elsevier, vol. 39(1), pages 35-46, August.
    21. Shaik, Saleem & Coble, Keith H. & Hudson, Darren & Miller, James C. & Hanson, Terrill R. & Sempier, Stephen H., 2008. "Willingness to Pay for a Potential Insurance Policy: Case Study of Trout Aquaculture," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(1), April.

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