Adjusting Crop Insurance APH Calculation to Accommodate Biomass Production
AbstractThe United States federal government currently subsidizes crop insurance to provide a safety-net to insured farmers. Agricultural economists have debated indirect impacts of the subsidized crop insurance program on producer behavior. One of those debates surrounds the issue of extensiveness, or if crop insurance encourages the production of certain crops for which insurance is more readily available. The federal government is also fostering an emerging cellulosic bioenergy industry with subsidies for planting perennial grass crops like switchgrass and miscanthus. This article analyzes how the current method for calculating actual production history (APH) may deter producers from planting perennial grasses and penalizes those producers who convert some of their row crop land to perennial grasses. An alternative APH calculation method suggested here would continue to provide a safety-net to producers, reduce indemnity payments by insurance companies, and reduce an impediment to planting perennial grasses. The conclusions are based on a utility-maximizing stochastic budgeting model with actual grain yields and FAPRI baseline prices for a representative farm in northeastern Missouri.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2013 AAEA: Crop Insurance and the Farm Bill Symposium, October 8-9, Louisville, KY with number 156945.
Date of creation: Sep 2013
Date of revision:
Contact details of provider:
Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
Crop Insurance; Bioenergy; Perennial Grasses; Agricultural and Food Policy; Crop Production/Industries; Resource /Energy Economics and Policy; D81; Q16; Q18; C15;
Find related papers by JEL classification:
- - - - - - -
- Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-10-18 (Agricultural Economics)
- NEP-ALL-2013-10-18 (All new papers)
- NEP-IAS-2013-10-18 (Insurance Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Epplin, Francis M. & Clark, Christopher D. & Roberts, Roland K. & Hwang, Seonghuyk, 2007.
"AJAE Appendix: Challenges to the Development of a Dedicated Energy Crop,"
American Journal of Agricultural Economics Appendices,
Agricultural and Applied Economics Association, vol. 89(5), December.
- Francis M. Epplin & Christopher D. Clark & Roland K. Roberts & Seonghuyk Hwang, 2007. "Challenges to the Development of a Dedicated Energy Crop," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(5), pages 1296-1302.
- Joseph W. Glauber, 2013. "The Growth Of The Federal Crop Insurance Program, 1990--2011," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 482-488.
- JunJie Wu, 1999. "Crop Insurance, Acreage Decisions, and Nonpoint-Source Pollution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 305-320.
- Barry K. Goodwin & Monte L. Vandeveer & John L. Deal, 2004. "An Empirical Analysis of Acreage Effects of Participation in the Federal Crop Insurance Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(4), pages 1058-1077.
- Walters, Cory G. & Shumway, C. Richard & Chouinard, Hayley H. & Wandschneider, Philip R., 2012. "Crop Insurance, Land Allocation, and the Environment," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(2), August.
- Joshua D. Woodard & Alexander D. Pavlista & Gary D. Schnitkey & Paul A. Burgener & Kimberley A. Ward, 2012. "Government Insurance Program Design, Incentive Effects, and Technology Adoption: The Case of Skip-Row Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(4), pages 823-837.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.