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The Crop Insurance Decision: Lenders And Producers Preferences

Author

Listed:
  • Leathan, David J.
  • Richardson, James W.
  • McCarl, Bruce A.

Abstract

The effect of the producer's choice of crop insurance was evaluated at both the producer and lender performance levels. Whole-farm, Monte Carlo simulations for Texas wheat/sorghum operations were completed over a six year period beginning in 1985. Results indicate crop insurance would be preferred by moderately risk averse producers when the probability of firm failure was positive or the insurance loss ratio approached one. A lender preferred the use of crop insurance whenever the probability of firm bankruptcy was nonzero and was indifferent otherwise.

Suggested Citation

  • Leathan, David J. & Richardson, James W. & McCarl, Bruce A., 1986. "The Crop Insurance Decision: Lenders And Producers Preferences," 1986 Annual Meeting, July 27-30, Reno, Nevada 278115, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea86:278115
    DOI: 10.22004/ag.econ.278115
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    File URL: https://ageconsearch.umn.edu/record/278115/files/aaea-1986-076.pdf
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    References listed on IDEAS

    as
    1. Richardson, James W. & Lemieux, Catharine M. & Nixon, Clair J., 1983. "Entry Into Farming: The Effects Of Leasing And Leverage On Firm Survival," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 15(2), pages 1-7, December.
    2. Robert P. King & George E. Oamek, 1983. "Risk Management by Colorado Dryland Wheat Farmers and the Elimination of the Disaster Assistance Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 247-255.
    3. Pflueger, Burton & Barry, Peter J., 1985. "Crop Insurance And Credit: A Farm Level Simulation Analysis," 1985 Regional Committee NC-161, October 9-10, 1985, St. Louis, Missouri 140940, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
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