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Measurement Of Price Risk In Revenue Insurance: Implications Of Distributional Assumptions

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  • Roberts, Matthew C.
  • Goodwin, Barry K.
  • Coble, Keith H.

Abstract

A variety of crop revenue insurance programs is now available. These programs require measurement of price risk. This article investigates the appropriateness of distributional assumptions underlying current and proposed alternative actuarial methods. Our results find that prices are best modeled using a flexible mixture of normals distribution.

Suggested Citation

  • Roberts, Matthew C. & Goodwin, Barry K. & Coble, Keith H., 1998. "Measurement Of Price Risk In Revenue Insurance: Implications Of Distributional Assumptions," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20840, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea98:20840
    DOI: 10.22004/ag.econ.20840
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    Cited by:

    1. Unknown, 2005. "Articles from Volume 1, Issue 2, 2005, Journal of International Agricultural Trade and Development," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 1(2).
    2. Ozaki, Vitor Augusto & Olinda, Ricardo & Faria, Priscila Neves & Campos, Rogerio Costa, 2014. "Estimation of the Agricultural Probability of Loss: evidence for soybean in Paraná Stats," Brazilian Journal of Rural Economy and Sociology (Revista de Economia e Sociologia Rural-RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 52(1), pages 1-16, March.
    3. Seyyed Ali Zeytoon Nejad Moosavian & Barry K. Goodwin, 2021. "Flexible modelling of multivariate risks in pricing margin protection insurance: modelling portfolio risks with mixtures of mixtures," Applied Economics, Taylor & Francis Journals, vol. 53(4), pages 411-440, January.
    4. Castañeda-Vera, Alba & Garrido, Alberto, 2017. "Evaluation of risk management tools for stabilising farm income under CAP 2014-2020," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 17(01), June.
    5. Peterson, Hikaru Hanawa & Tomek, William G., 2000. "Commodity Price Behavior: A Rational Expectations Storage Model of Corn," Working Papers 127682, Cornell University, Department of Applied Economics and Management.
    6. María Bielza & Alberto Garrido & José M. Sumpsi, 2004. "Revenue insurance as an income stabilization policy: an application to the Spanish olive oil sector," Post-Print hal-01201063, HAL.
    7. Chen, Shu-Ling & Miranda, Mario J., 2006. "Modeling Yield Distribution In High Risk Counties: Application To Texas Upland Cotton," 2006 Annual meeting, July 23-26, Long Beach, CA 21392, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Makus, Larry D. & Wang, H. Holly & Chen, Xiaomei, 2003. "Evaluating Risk Management Strategies For Non-Irrigated Small Grain Producers," 2003 Annual meeting, July 27-30, Montreal, Canada 22257, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Ker, Alan. P & Tolhurst, Tor & Liu, Yong, 2015. "Rating Area-yield Crop Insurance Contracts Using Bayesian Model Averaging and Mixture Models," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205211, Agricultural and Applied Economics Association.
    10. Watten, Asa & Hennessy, David A. & Zhao, Jinhua, 2018. "Insurance and American Options in Intra-season Cropping Choices with Applications," 2018 Annual Meeting, August 5-7, Washington, D.C. 274480, Agricultural and Applied Economics Association.
    11. Hikaru Hanawa Peterson & William G. Tomek, 2005. "How much of commodity price behavior can a rational expectations storage model explain?," Agricultural Economics, International Association of Agricultural Economists, vol. 33(3), pages 289-303, November.
    12. Jindřich Špička, 2009. "The Risk Analysis in the Agricultural Enterprises using Earnings at Risk Method," Ekonomika a Management, Prague University of Economics and Business, vol. 2009(3).
    13. Nganje, William E. & Tiapo, Napoleon M. & Wilson, William W., 2001. "Crop Insurance Under Quality Uncertainty," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36097, Western Agricultural Economics Association.
    14. Anderson, Jock R., 2003. "Risk in rural development: challenges for managers and policy makers," Agricultural Systems, Elsevier, vol. 75(2-3), pages 161-197.
    15. Unknown, 2012. "Journal of International Agricultural Trade and Development, Volume 08, Issue 1," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 8(1), pages 112-112.
    16. Tóth, M. & Lančarič, D. & Piterková, A. & Savov, R., 2014. "Systematic Risk in Agriculture: A Case of Slovakia," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(4), pages 1-9, December.
    17. Bielza, María & Garrido, Alberto & Sumpsi, José M., 2004. "Revenue insurance as an income stabilization policy: an application to the Spanish olive oil sector," Cahiers d'Economie et de Sociologie Rurales (CESR), Institut National de la Recherche Agronomique (INRA), vol. 70.
    18. Kirk, Robert, 1971. "Growth Potential Identification and Public Investment Strategy," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 1(1), pages 1-12.
    19. Ozaki, Vitor Augusto & Adami, Andreia Cristina de Oliveira, 2013. "Managing the Agricultural Revenue Risk in Brazil: Implications for Developing a Crop Insurance Program," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151289, Agricultural and Applied Economics Association.
    20. Richards, Timothy J. & Manfredo, Mark R., 2003. "Infrequent Shocks and Rating Revenue Insurance: A Contingent Claims Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-19, August.
    21. Buschena, David E. & Ziegler, Lee, 1999. "Reliability Of Options Markets For Crop Revenue Insurance Rating," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-26, December.
    22. Framingham, Charles F. & Craddock, W.J., 1974. "Urban Implications of Regional and Interregional Efficiency in Agricultural Production," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 4(1), pages 1-18.
    23. María Bielza & Alberto Garrido & José M. Sumpsi, 2004. "Revenue insurance as an income stabilization policy: an application to the Spanish olive oil sector," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 70, pages 5-27.
    24. Ghahremanzadeh, Mohammad & Mohammadrezaei, Rassul & Dashti, Ghader & Ainollahi, Moharram, 2018. "Designing a whole-farm revenue insurance for agricultural crops in Zanjan province of Iran," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 17(02), January.
    25. Bielza, Maria & Garrido, Alberto & Sumpsi, Jose Maria, 2002. "Revenue Insurance as an Income Stabilization Policy: An Application to the Spanish Olive Oil Sector," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24842, European Association of Agricultural Economists.

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