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Factors Influencing Farmers' Crop Insurance Decisions

Author

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  • Bruce J. Sherrick
  • Peter J. Barry
  • Paul N. Ellinger
  • Gary D. Schnitkey

Abstract

Farmers' decisions to purchase crop insurance and their choices among alternative products are analyzed using a two‐stage estimation procedure. The influences of risk perceptions, competing risk management options, as well structural and demographic differences are evaluated. The likelihood for crop insurance usage is found to be higher for larger, older, less tenured, more highly leveraged farms, and by those with higher perceived yield risks. The marginal effects of size, age, perceived yield risk, perceived importance of risk management activities, and other structural and demographic variables are identified in terms of their influences on choices among alternative crop insurance products.

Suggested Citation

  • Bruce J. Sherrick & Peter J. Barry & Paul N. Ellinger & Gary D. Schnitkey, 2004. "Factors Influencing Farmers' Crop Insurance Decisions," American Journal of Agricultural Economics, John Wiley & Sons, vol. 86(1), pages 103-114, February.
    • Handle: RePEc:wly:ajagec:v:86:y:2004:i:1:p:103-114
    DOI: 10.1111/j.1467-8276.2004.tb18459.x
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    References listed on IDEAS

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    1. 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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    3. Vincent H. Smith & Barry K. Goodwin, 1995. "The Economics of Crop Insurance and Disaster Aid," Books, American Enterprise Institute, number 53374, September.
    4. Makki, Shiva S. & Somwaru, Agapi, 2001. "Asymmetric Information in the Market for Yield and Revenue Insurance," Technical Bulletins 184331, United States Department of Agriculture, Economic Research Service.
    5. Elke U. Weber & Richard A. Milliman, 1997. "Perceived Risk Attitudes: Relating Risk Perception to Risky Choice," Management Science, INFORMS, vol. 43(2), pages 123-144, February.
    6. Vincent H. Smith & Alan E. Baquet, 1996. "The Demand for Multiple Peril Crop Insurance: Evidence from Montana Wheat Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 189-201.
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    Cited by:

    1. Marco Rogna & Günter Schamel & Alex Weissensteiner, 2019. "Choosing between Hail Insurance and Anti-Hail Nets: A Simple Model and a Simulation among Apples Producers in South Tyrol," BEMPS - Bozen Economics & Management Paper Series BEMPS62, Faculty of Economics and Management at the Free University of Bozen.
    2. Omobolaji Omobitan & Aditya R. Khanal, 2022. "Examining Farm Financial Management: How Do Small US Farms Meet Their Agricultural Expenses?," JRFM, MDPI, vol. 15(3), pages 1-15, March.
    3. Luigi Biagini & Simone Severini, 2021. "The role of Common Agricultural Policy (CAP) in enhancing and stabilising farm income: an analysis of income transfer efficiency and the Income Stabilisation Tool," Papers 2104.14188, arXiv.org.
    4. Burns, Christopher & Prager, Daniel, "undated". "Do Direct Payments and Crop Insurance Influence Commercial Farm Survival and Decisions to Expand?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235693, Agricultural and Applied Economics Association.

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