The Effects of Area-based Revenue Protection on Producers’ Choices of Farm-level Revenue Insurance
Producers’ increased reliance on crop insurance has led to concerns about losses producers could incur that are not covered by crop insurance. In the current farm bill debate, several proposals that would be based on area (county) revenue and are intended to cover a portion of producers’ crop insurance deductibles, referred to as “shallow loss” programs, have been advanced. We analyze, using an empirically-based simulation model and a certainty equivalent criterion, how shallow loss coverages might affect optimal coverage levels of farm-level revenue insurance for a moderately risk-averse producer. Our analysis suggests that area-based revenue insurance designs have some potential for causing producers to reduce coverage levels for farm-level revenue insurance, though the marginal differences in the certainty equivalents are often relatively small on a percentage basis.
|Date of creation:||20 May 2013|
|Date of revision:|
|Contact details of provider:|| Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202|
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barry J. Barnett & Keith H. Coble, 2012. "Understanding Regional Differences in Farm Policy Preferences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(2), pages 528-534.
- Mario J. Miranda, 1991. "Area-Yield Crop Insurance Reconsidered," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 233-242.
- Dismukes, Robert & Young, C. Edwin, 2008. "New Market Realities Affect Crop Program Choices," Amber Waves, United States Department of Agriculture, Economic Research Service, November.
- Cooper, Joseph C. & Delbecq, Benoit A. & Davis, Christopher G., 2012. "Fiscal and Farm Level Consequences of “Shallow Loss” Commodity Support," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124199, Agricultural and Applied Economics Association.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea13:149545. 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: (AgEcon Search)
If references are entirely missing, you can add them using this form.