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Implications Of Crop Insurance For Farmers And Lenders

Author

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  • Leatham, David J.
  • McCarl, Bruce A.
  • Richardson, James W.

Abstract

The effect of the farmer's choice of crop insurance was evaluated on both the farmer's and lender's performance. This was done using whole-farm, Monte Carlo simulation for Texas wheat/sorghum operations. Results indicate crop insurance would be preferred by moderately risk-averse farmers when farm firm failure became an issue or the insurance loss ration approached one. A lender always preferred the use of crop insurance, especially when the probability of firm bankruptcy was an issue.

Suggested Citation

  • Leatham, David J. & McCarl, Bruce A. & Richardson, James W., 1987. "Implications Of Crop Insurance For Farmers And Lenders," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(02), December.
  • Handle: RePEc:ags:sojoae:30193
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    File URL: http://purl.umn.edu/30193
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    References listed on IDEAS

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    1. McCarl, Bruce A., 1988. "Preference Among Risky Prospects Under Constant Risk Aversion," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 20(02), December.
    2. Richardson, James W. & Lemieux, Catharine M. & Nixon, Clair J., 1983. "Entry Into Farming: The Effects Of Leasing And Leverage On Firm Survival," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 15(02), December.
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    Cited by:

    1. Seo, Sangtaek & Leatham, David J. & Mitchell, Paul D., 2003. "Risk Sharing and Incentives with Crop Insurance and External Equity Financing," Proceedings: 2003 Regional Committee NCT-194, October 6-7, 2003; Kansas City, Missouri 132523, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    2. Olsen, Douglas Ray, 1990. "An analysis of the use of farm marketing and crop insurance risk transfer tools by Iowa farm characteristics," ISU General Staff Papers 1990010108000018157, Iowa State University, Department of Economics.

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    Keywords

    Risk and Uncertainty;

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