Analyzing Federal Farm Program and Crop Insurance Options to Assess Policy Design and Risk Management Implications for Crop Producers
AbstractRecent changes in federal farm programs and contemporary farm program proposals highlight an evolving shift in farm policy from income support to risk management. A mix of price- and revenue-based commodity programs as well as yield- and revenue-based insurance products provide crop producers a complex portfolio of risk management tools and choices. To make effective risk management decisions, crop producers must integrate farm programs and crop insurance alternatives in a comprehensive risk management decision-making framework. This work assesses the risk management performance and complementarity or substitutability of farm program and crop insurance options. A novel representative farm model for Nebraska is used that incorporates national, state, district, county, and farm-level yield variables along with national and state-level price variables to accurately assess multiple farm program and crop insurance alternatives. The four-stage simulation model simultaneously estimates all necessary yield and price variables in a statistically-distributed and correlated framework. This allows for a consistent and complete analysis of alternative farm program and crop insurance choices and designs. The simulation produces crop revenue, farm program, and crop insurance results for eight representative farms indicative of the crop mix and productivity levels in each of the eight agricultural statistics districts in Nebraska. The results demonstrate the risk management performance of alternative farm program and crop insurance choices for the eight representative farms in Nebraska. The analysis demonstrates the complementarity of farm programs with some crop insurance products and protection levels while showing potential substitutability or overlap with other products and protection levels. The results provide insight for more effective policy design, farm program participation, and farm-level risk management decision-making.
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 157827.
Date of creation: 08 Oct 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
farm bill; farm programs; crop insurance; risk management; Agricultural and Food Policy; Farm Management; Risk and Uncertainty;
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.:
- Jansen, Jim A. & Stockton, Matthew C. & Lubben, Bradley D., 2012. "Modeling Correlated and Disaggregated Crop Revenue Distributions: Implications under Mixed Policy and Program Initiatives," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124688, Agricultural and Applied Economics Association.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.