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Managing the Agricultural Revenue Risk in Brazil: Implications for Developing a Crop Insurance Program

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  • Ozaki, Vitor Augusto
  • Adami, Andreia Cristina de Oliveira

Abstract

Since 2003 crop insurance programs became the focus of agricultural policy in Brazil. Given the increasing interest in insurance, accurate calculation of premium values is of great importance. We address the issue of the revenue distribution at the farm-level and its implication to the Brazilian crop insurance contract. We estimate the probability of loss by using the Skew-normal distribution of revenue in the West of Parana (South of Brazil). Results show that insurers (empirical) rates tend to underestimate the risk in the lower coverage levels (50% and 60%). At the level of 70% of coverage the Empirical Rate and the Skew-Normal Rate are similar on average.

Suggested Citation

  • Ozaki, Vitor Augusto & Adami, Andreia Cristina de Oliveira, 2013. "Managing the Agricultural Revenue Risk in Brazil: Implications for Developing a Crop Insurance Program," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151289, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:151289
    DOI: 10.22004/ag.econ.151289
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    References listed on IDEAS

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    1. Skees, Jerry R. & Harwood, Joy L. & Somwaru, Agapi & Perry, Janet E., 1998. "The Potential For Revenue Insurance Policies In The South," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 30(01), pages 1-15, July.
    2. Goodwin, Barry K. & Roberts, Matthew C. & Coble, Keith H., 2000. "Measurement Of Price Risk In Revenue Insurance: Implications Of Distributional Assumptions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(01), pages 1-20, July.
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