IDEAS home Printed from https://ideas.repec.org/a/cup/agrerw/v47y2018i03p452-476_00.html
   My bibliography  Save this article

Alternative Strategies to Manage Weather Risk in Perennial Fruit Crop Production

Author

Listed:
  • Ho, Shuay-Tsyr
  • Ifft, Jennifer E.
  • Rickard, Bradley J.
  • Turvey, Calum G.

Abstract

Fruit producers in the Eastern United States face a wide range of weather-related risks that have the capacity to largely impact yields and profitability. This research examines the economic implications associated with responding to these risks for sweet cherry production in three different systems: high tunnels, revenue insurance, and weather insurance. The analysis considers a distribution of revenue flows and costs using detailed price, yield, and weather data between 1984 and 2013. Our results show that the high tunnel system generates the largest net return if significant price premiums exist for earlier and larger fruit.

Suggested Citation

  • Ho, Shuay-Tsyr & Ifft, Jennifer E. & Rickard, Bradley J. & Turvey, Calum G., 2018. "Alternative Strategies to Manage Weather Risk in Perennial Fruit Crop Production," Agricultural and Resource Economics Review, Cambridge University Press, vol. 47(3), pages 452-476, December.
    • Handle: RePEc:cup:agrerw:v:47:y:2018:i:03:p:452-476_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1068280517000296/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Barry Barnett, 2014. "Multiple-peril crop insurance: successes and challenges," Agricultural Finance Review, Emerald Group Publishing, vol. 74(2), pages 200-216, July.
    3. Lindsey, Jeanne K. & Duffy, Patricia A. & Nelson, Robert G. & Ebel, Robert C. & Dozier, William A., 2009. "Evaluation of Risk Management Methods for Satsuma Mandarin," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46754, Southern Agricultural Economics Association.
    4. Curtis, Kynda R. & Yeager, Irvin & Black, Brent & Drost, Daniel & Ward, Ruby, 2014. "Market and Pricing Potential for Extended Season Fresh Produce Sales: An Intermountain West Example," Journal of Food Distribution Research, Food Distribution Research Society, vol. 45(2), pages 1-20, July.
    5. Belasco, Eric & Galinato, Suzette & Marsh, Tom & Miles, Carol & Wallace, Russell, 2013. "High Tunnels Are My Crop Insurance: An Assessment of Risk Management Tools for Small-scale Specialty Crop Producers," Agricultural and Resource Economics Review, Cambridge University Press, vol. 42(2), pages 403-418, August.
    6. Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153, Elsevier.
    7. Calum G. Turvey & Joshua Woodard & Edith Liu, 2014. "Financial engineering for the farm problem," Agricultural Finance Review, Emerald Group Publishing, vol. 74(2), pages 271-286, July.
    8. Alfons Weersink & Szu-Hsuan Celia Chiang, 2006. "Pricing Weather Insurance with a Random Strike Price: The Ontario Ice-Wine Harvest," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 696-709.
    9. Price, T. Jeffrey & Wetzstein, Michael E., 1999. "Irreversible Investment Decisions In Perennial Crops With Yield And Price Uncertainty," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(1), pages 1-13, July.
    10. Calum G. Turvey, 2001. "Weather Derivatives for Specific Event Risks in Agriculture," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 23(2), pages 333-351.
    11. Fleege, Trevor A. & Richards, Timothy J. & Manfredo, Mark R. & Sanders, Dwight R., 2004. "The Performance Of Weather Derivatives In Managing Risks Of Specialty Crops," 2004 Conference, April 19-20, 2004, St. Louis, Missouri 19026, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    12. Feng Song & Jinhua Zhao & Scott M. Swinton, 2011. "Switching to Perennial Energy Crops Under Uncertainty and Costly Reversibility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 764-779.
    13. Leif Erec Heimfarth & Oliver Musshoff, 2011. "Weather index-based insurances for farmers in the North China Plain: An analysis of risk reduction potential and basis risk," Agricultural Finance Review, Emerald Group Publishing, vol. 71(2), pages 218-239, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shuoli Zhao & Chengyan Yue, 2020. "Risk preferences of commodity crop producers and specialty crop producers: An application of prospect theory," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 359-372, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Turvey, Calum G. & Norton, Michael, 2008. "An Internet-Based Tool for Weather Risk Management," Agricultural and Resource Economics Review, Cambridge University Press, vol. 37(1), pages 63-78, April.
    2. McCarty, Tanner & Sesmero, Juan & Gramig, Ben, 2016. "Contracting for Perennial Energy Crops Under Uncertainty and Costly Reversibility," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236092, Agricultural and Applied Economics Association.
    3. Dumortier, Jerome & Kauffman, Nathan & Hayes, Dermot J., 2017. "Production and spatial distribution of switchgrass and miscanthus in the United States under uncertainty and sunk cost," Energy Economics, Elsevier, vol. 67(C), pages 300-314.
    4. Shuoli Zhao & Chengyan Yue, 2020. "Risk preferences of commodity crop producers and specialty crop producers: An application of prospect theory," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 359-372, May.
    5. Xian, Hui & Colson, Gregory & Mei, Bin & Wetzstein, Michael E., 2015. "Co-firing coal with wood pellets for U.S. electricity generation: A real options analysis," Energy Policy, Elsevier, vol. 81(C), pages 106-116.
    6. Dumortier, Jerome Robert Florian, 2011. "The impact of forest offset credits under a stochastic carbon price on agriculture using a rational expectations and real options framework," ISU General Staff Papers 201101010800001160, Iowa State University, Department of Economics.
    7. Calum G. Turvey, 2010. "Biography: Kiyosi Itô and his influence on the study of agricultural finance and economics," Agricultural Finance Review, Emerald Group Publishing, vol. 70(1), pages 5-20, May.
    8. Zhang, Li, 2008. "Three essays on agricultural risk and insurance," ISU General Staff Papers 2008010108000016857, Iowa State University, Department of Economics.
    9. McCarty, Tanner & Sesmero, Juan, 2021. "Contracting for perennial energy crops and the cost-effectiveness of the Biomass Crop Assistance Program," Energy Policy, Elsevier, vol. 149(C).
    10. Brausmann, Alexandra & Bretschger, Lucas, 2018. "Economic development on a finite planet with stochastic soil degradation," European Economic Review, Elsevier, vol. 108(C), pages 1-19.
    11. Work, James & Hauer, Grant & Luckert, M.K. (Marty), 2018. "What ethanol prices would induce growers to switch from agriculture to poplar in Alberta? A multiple options approach," Journal of Forest Economics, Elsevier, vol. 33(C), pages 51-62.
    12. Boncinelli, Fabio & Bartolini, Fabio & Casini, Leonardo, 2018. "Structural factors of labour allocation for farm diversification activities," Land Use Policy, Elsevier, vol. 71(C), pages 204-212.
    13. Tangermann, Stefan, 2011. "Risk Management in Agriculture and the Future of the EU's Common Agricultural Policy," National Policies, Trade and Sustainable Development 320171, International Centre for Trade and Sustainable Development (ICTSD).
    14. Nancy McCarthy & Gero Carletto & Benjamin Davis & Irini Maltsoglou, 2006. "Assessing the Impact of Massive Out-Migration on Agriculture," Working Papers 06-14, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    15. Jean-Philippe Boussemart & Walter Briec & Christophe Tavera, 2011. "More evidence on technological catching-up in the manufacturing sector," Applied Economics, Taylor & Francis Journals, vol. 43(18), pages 2321-2330.
    16. Jesse Tack & David Ubilava, 2013. "The effect of El Niño Southern Oscillation on U.S. corn production and downside risk," Climatic Change, Springer, vol. 121(4), pages 689-700, December.
    17. Buchholz, Matthias & Musshoff, Oliver, 2014. "The role of weather derivatives and portfolio effects in agricultural water management," Agricultural Water Management, Elsevier, vol. 146(C), pages 34-44.
    18. Alexis Berg & Philippe Quirion & Benjamin Sultan, 2009. "Weather-index drought insurance in Burkina-Faso: assessment of its potential interest to farmers," Post-Print hal-00520893, HAL.
    19. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    20. Luisa Menapace & Gregory Colson & Roberta Raffaelli, 2016. "A comparison of hypothetical risk attitude elicitation instruments for explaining farmer crop insurance purchases," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 43(1), pages 113-135.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:agrerw:v:47:y:2018:i:03:p:452-476_00. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://www.cambridge.org/age .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Keith Waters (email available below). General contact details of provider: https://www.cambridge.org/age .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.