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Examining Contemporaneous Farm and County Losses Using Farm Level Data

Author

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  • Zulauf, Carl R.
  • Demircan, Vecdi
  • Scnhitkey, Gary
  • Barnaby, Glenn Arthur, Jr.
  • Ibendahl, Gregg
  • Herbel, Kevin

Abstract

Characteristics of farm level yield and revenue loss that is systemic with yield and revenue loss at the county, state, and U.S. level are examined using farm yields from the Illinois and Kansas farm business management associations. The data begins with 1972. Share of yield and revenue loss systemic with the larger geographical areas declines as the level of loss increases, implying a greater share of larger losses is idiosyncratic to an individual farm. Farm loss systemic with the county generally is larger for Kansas than Illinois farms, which calls into question that county-based programs are less effective for plain states due to the larger size of their counties. Last, for the small set of farms that yields for a crop for all years of the analysis, the correlation between a farm and county yield/revenue deviations had limited ability to explain the share of a farm’s loss that is systemic with a county. This finding suggests that only by examining loss experiences for the farm and the county can the value of county risk management programs be ascertained.

Suggested Citation

  • Zulauf, Carl R. & Demircan, Vecdi & Scnhitkey, Gary & Barnaby, Glenn Arthur, Jr. & Ibendahl, Gregg & Herbel, Kevin, 2013. "Examining Contemporaneous Farm and County Losses Using Farm Level Data," 2013 AAEA: Crop Insurance and the Farm Bill Symposium, October 8-9, Louisville, KY 157812, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaeaci:157812
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    File URL: http://purl.umn.edu/157812
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    References listed on IDEAS

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    1. Roger Claassen & Richard E. Just, 2010. "Heterogeneity and Distributional Form of Farm-Level Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(1), pages 144-160.
    2. Keith H. Coble & Barry J. Barnett, 2013. "Why Do We Subsidize Crop Insurance?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 498-504.
    3. Jean-Marc Bourgeon & Robert G. Chambers, 2003. "Optimal Area-Yield Crop Insurance Reconsidered," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 590-604.
    4. Olivier Mahul, 2001. "Optimal Insurance Against Climatic Experience," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 593-604.
    5. Joseph W. Glauber, 2004. "Crop Insurance Reconsidered," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1179-1195.
    6. Thomas O. Knight & Keith H. Coble & Barry K. Goodwin & Roderick M. Rejesus & Sangtaek Seo, 2010. "Developing Variable Unit-Structure Premium Rate Differentials in Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 141-151.
    7. Mario J. Miranda & Joseph W. Glauber, 1997. "Systemic Risk, Reinsurance, and the Failure of Crop Insurance Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 206-215.
    8. Joseph Cooper & Carl Zulauf & Michael Langemeier & Gary Schnitkey, 2012. "Implications of within county yield heterogeneity for modeling crop insurance premiums," Agricultural Finance Review, Emerald Group Publishing, vol. 72(1), pages 134-155, May.
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    Cited by:

    1. Lim, Jinsoon & Kim, Sanghyo & Zulauf, Carl, 2015. "What Explains the Share of Farm Loss Systemic with County Loss?," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205804, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    2. Zulauf, Carl R. & Orden, David, 2014. "Assessing the Political Economy of the 2014 U.S. Farm Bill," Proceedings Issues, 2014: Food, Resources and Conflict, December 7-9, 2014, San Diego, California 197160, International Agricultural Trade Research Consortium.
    3. Orden, David & Zulauf, Carl R., 2015. "The Political Economy of the 2014 Farm Bill," 2015 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2015, Boston, Massachusetts 189692, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    systemic crop risk; crop insurance; farm level data; Agricultural and Food Policy; Risk and Uncertainty;

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