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Is There a Viable Market for Area-Based Crop Insurance?

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  • Barry J. Barnett
  • Dmitry V. Vedenov

Abstract

The performance of area yield insurance and farm-level multiple peril crop insurance is analyzed for cotton and soybean production in Georgia and South Carolina. The analysis improves on many previous studies by utilizing actual farm-level yield data and by comparing the two types of insurance products not only for actuarially fair premium rates but also for actual unsubsidized and subsidized premium rates. Results suggest that, even in heterogeneous production regions, area yield insurance may be a viable alternative to farm-level insurance when premium rates for farm-level insurance contain large positive wedges. Copyright 2007, Oxford University Press.

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File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.00975.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): 89 (2007)
Issue (Month): 2 ()
Pages: 508-519

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Handle: RePEc:oup:ajagec:v:89:y:2007:i:2:p:508-519

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Citations

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Cited by:
  1. Zhang, Rui (Carolyn) & Houston, Jack E. & Vedenov, Dmitry V. & Barnett, Barry J., 2008. "Impacts of government risk management policies on hedging in futures and options:LPM2 hedge model vs. EU hedge model," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37610, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  2. Shen, Zhiwei & Odening, Martin, 2012. "Coping with Systemic Risk in Index-based Crop Insurance," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122555, European Association of Agricultural Economists.
  3. Woodard, Joshua D. & Sherrick, Bruce J. & Schnitkey, Gary D., 2009. "Revenue Risk Reduction Impacts of Crop Insurance in a Multi-Crop Framework," 2009 Conference, April 20-21, 2009, St. Louis, Missouri 53043, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  4. Cooper, Joseph C., 2009. "Payments under the Average Crop Revenue Program: Implications for Government Costs and Producer Preferences," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(1), April.
  5. Deng, Xiaohui & Barnett, Barry J. & Hoogenboom, Gerrit & Yu, Yingzhuo & Garcia y Garcia, Axel, 2008. "Alternative Crop Insurance Indexes," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(01), April.
  6. Barnett, Barry J. & Barrett, Christopher B. & Skees, Jerry R., 2008. "Poverty Traps and Index-Based Risk Transfer Products," World Development, Elsevier, vol. 36(10), pages 1766-1785, October.
  7. Mitchell, Paul D. & Knight, Thomas O., 2007. "Economic Analysis of Supplemental Deductible Coverage as Recommended in the USDA's 2007 Farm Bill Proposal," Staff Paper Series 509, University of Wisconsin, Agricultural and Applied Economics.
  8. Ramirez, Octavio A. & Carpio, Carlos E. & Rejesus, Roderick M., 2009. "Can Crop Insurance Premiums be Reliably Estimated?," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49465, Agricultural and Applied Economics Association.
  9. Vedenov, Dmitry V., 2008. "Application of Copulas to Estimation of Joint Crop Yield Distributions," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6264, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Geoffroy Enjolras & Robert Kast & Patrick Sentis, 2009. "Diversification in Area-Yield Crop Insurance : The Multi Linear Additive Model," Working Papers 09-15, LAMETA, Universtiy of Montpellier, revised Nov 2009.
  11. Robert Kast, 2011. "Managing financial risks due to natural catastrophes," Working Papers hal-00610241, HAL.
  12. Cooper, Joseph C. & Delbecq, Benoit A. & Davis, Christopher G., 2012. "Fiscal and Farm Level Consequences of “Shallow Loss” Commodity Support," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124199, Agricultural and Applied Economics Association.
  13. Cooper, Joseph C., 2008. "A Revenue-Based Alternative to the Counter-Cyclical Payment Program," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6197, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  14. Cooper, Joseph C., 2009. "ACRE: A Revenue-Based Alternative to Price-Based Commodity Payment Programs," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49180, Agricultural and Applied Economics Association.
  15. Wang, Yang & Barnett, Barry J. & Coble, Keith H. & Harri, Ardian, 2012. "Yield Aggregation Impacts on a “Deep Loss” Systemic Risk Protection Program," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124875, Agricultural and Applied Economics Association.
  16. Joseph Cooper & Carl Zulauf & Michael Langemeier & Gary Schnitkey, 2012. "Implications of within county yield heterogeneity for modeling crop insurance premiums," Agricultural Finance Review, Emerald Group Publishing, vol. 72(1), pages 134-155, March.

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