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Revenue Protection for Organic Producers: Too Much or Too Little?

  • Singerman, Ariel
  • Hart, Chad E.
  • Lence, Sergio H.

A framework is developed to examine organic crop insurance established by the Risk Management Agency (RMA). Given that the RMA links organic and conventional crop prices, the model is calibrated to reflect both markets to illustrate the impacts that pricing has on insurance coverage. Findings indicate that at the 75% coverage level, the RMA’s fixed-price factor implies an effective coverage ranging from 43% to 105% depending on the ratio of planting-time organic to conventional market prices. Results suggest the RMA’s program is likely to induce adverse selection because the nominal coverage level is likely to deviate substantially from the effective coverage.

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File URL: http://purl.umn.edu/142353
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Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 37 (2012)
Issue (Month): 3 (December)
Pages:

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Handle: RePEc:ags:jlaare:142353
Contact details of provider: Web page: http://waeaonline.org/

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  1. Klonsky, Karen & Greene, Catherine R., 2005. "Widespread Adoption of Organic Agriculture in the US: Are Market-Driven Policies Enough?," 2005 Annual meeting, July 24-27, Providence, RI 19382, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Nick D. Paulson & Bruce A. Babcock, 2007. "Get a GRIP: Should Area Revenue Coverage Be Offered through the Farm Bill or as a Crop Insurance Program?," Center for Agricultural and Rural Development (CARD) Publications 07-wp440, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  3. Lence, Sergio H. & Hayes, Dermot J., 2005. "Genetically Modified Crops: Their Market and Welfare Impacts," Staff General Research Papers 12435, Iowa State University, Department of Economics.
  4. McBride, William D. & Greene, Catherine R., 2008. "The Profitability of Organic Soybean Production," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6449, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Chad E. Hart & Dermot J. Hayes & Bruce A. Babcock, 2003. "Insuring Eggs in Baskets," Center for Agricultural and Rural Development (CARD) Publications 03-wp339, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  6. Sergio H. Lence & Dermot J. Hayes, 2000. "U.S. Farm Policy and the Variability of Commodity Prices and Farm Revenues," Center for Agricultural and Rural Development (CARD) Publications 00-wp239, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  7. Loureiro, Maria L. & McCluskey, Jill J. & Mittelhammer, Ronald C., 2001. "Assessing Consumer Preferences For Organic, Eco-Labeled, And Regular Apples," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(02), December.
  8. Bruce A. Babcock & David A. Hennessy, 1996. "Input Demand under Yield and Revenue Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 416-427.
  9. repec:cup:cbooks:9780521326162 is not listed on IDEAS
  10. Nicolai V. Kuminoff & Ada Wossink, 2010. "Why Isn't More US Farmland Organic?," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 240-258.
  11. Babcock, Bruce A. & Blackmer, Alfred M., 1992. "The Value Of Reducing Temporal Input Nonuniformities," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(02), December.
  12. Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economics Reports 34081, United States Department of Agriculture, Economic Research Service.
  13. Singerman, Ariel & Hart, Chad E. & Lence, Sergio H., 2010. "Demand For Crop Insurance By Organic Corn And Soybean Farmers In Three Major Producing States," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60935, Agricultural and Applied Economics Association.
  14. Babcock, Bruce A. & Blackmer, A. M., 1992. "Value of Reducing Temporal Input Nonuniformities (The)," Staff General Research Papers 10587, Iowa State University, Department of Economics.
  15. Singerman, Ariel & Lence, Sergio H. & Kimble-Evans, Amanda, 2010. "Organic Crop Prices, or 2x Conventional Ones?," Staff General Research Papers 31544, Iowa State University, Department of Economics.
  16. Wright, Brian D, 1979. "The Effects of Ideal Production Stabilization: A Welfare Analysis Under Rational Behavior," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1011-33, October.
  17. Keith H. Coble & Thomas O. Knight & Rulon D. Pope & Jeffery R. Williams, 1996. "Modeling Farm-Level Crop Insurance Demand with Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 439-447.
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