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Whole Farm Income Insurance in a Canadian Context

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  • Turvey, Calum G.

Abstract

This paper employs mean-variance and mean-skewness optimization to investigate farmers’ crop choices under Gross Revenue Insurance (GRIP), Whole Farm Income Insurance, the Canadian Agricultural Income Stabilization program, and its modified 2008 program AgrInvest. To our knowledge this paper is the first to fully consider the endogenous optimization of whole farm insurance in a farm optimization model. The results indicate that farmers will alter farm plans significantly in response to the type of insurance offered and the level of subsidy. Farmers will take on production risks that they would not otherwise take and this risk taking behavior is exacerbated by subsidy.

Suggested Citation

  • Turvey, Calum G., 2010. "Whole Farm Income Insurance in a Canadian Context," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61732, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61732
    DOI: 10.22004/ag.econ.61732
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    References listed on IDEAS

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    1. Wilson, William W. & Gustafson, Cole R. & Dahl, Bruce L., 2006. "Production Risk And Crop Insurance In Malting Barley: A Stochastic Dominance Analysis," Agribusiness & Applied Economics Report 23561, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Tsiang, S C, 1972. "The Rationale of the Mean-Standard Deviation Analysis, Skewness Preference, and the Demand for Money," American Economic Review, American Economic Association, vol. 62(3), pages 354-371, June.
    3. Turvey, Calum G. & Islam, Zahirul, 1995. "Equity and efficiency considerations in area versus individual yield insurance," Agricultural Economics, Blackwell, vol. 12(1), pages 23-35, April.
    4. Berg, Ernst, 2002. "Assessing the Farm Level Impacts of Yield and Revenue Insurance: an Expected Value-Variance Approach," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24834, European Association of Agricultural Economists.
    5. Haim Levy, 1992. "Stochastic Dominance and Expected Utility: Survey and Analysis," Management Science, INFORMS, vol. 38(4), pages 555-593, April.
    6. Hennessy, David A. & Saak, Alexander E. & Babcock, Bruce A., 2003. "Fair Value Of Whole-Farm And Crop-Specific Revenue Insurance," 2003 Annual meeting, July 27-30, Montreal, Canada 21988, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. David A. Hennessy & Bruce A. Babcock & Dermot J. Hayes, 1997. "Budgetary and Producer Welfare Effects of Revenue Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1024-1034.
    8. William Wilson & Cole Gustafson & Bruce Dahl, 2009. "Crop insurance in malting barley: a stochastic dominance analysis," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 69(1), pages 98-112, May.
    9. Bawa, Vijay S. & Lindenberg, Eric B., 1977. "Capital market equilibrium in a mean-lower partial moment framework," Journal of Financial Economics, Elsevier, vol. 5(2), pages 189-200, November.
    10. Dismukes, Robert & Durst, Ron L., 2006. "Whole-Farm Approaches to a Safety Net," Economic Information Bulletin 33893, United States Department of Agriculture, Economic Research Service.
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    Cited by:

    1. 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).
    2. Kimura, Shingo & Anton, Jesus, "undated". "Farm Income Stabilization and Risk Management: Some Lessons from AgriStability Program in Canada," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114755, European Association of Agricultural Economists.
    3. Ghahremanzadeh, Mohammad & Mohammadrezaei, Rassul & Dashti, Ghader & Ainollahi, Moharram, . "Designing a whole-farm revenue insurance for agricultural crops in Zanjan province of Iran," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 17(02).

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