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Implications of Rice Variety Selection to Optimize Returns from Crop Insurance

Author

Listed:
  • Branscum, D. Ethan
  • Nalley, Lawton L.
  • Dixon, Bruce L.
  • Siebenmorgen, Terry J.
  • Tack, Jesse
  • Danforth, Diana M.

Abstract

Rice production is distinguished from most other field crops by distinct differences in yields across cultivars and producers being paid on production as a result of post-harvest milling into head rice and brokens. In the ten years of Arkansas harvest data from performance trials in six different locations, hybrids are shown the have 19 percent higher paddy yields and head rice yield rates 1.8 percentage points lower than conventional varieties. In crop insurance yield protection and revenue protection policies, no distinctions in premiums are made on the basis of variety. Adjustments for adverse milling outcomes are made only in the most extreme cases. Using a three-equation, econometric model to predict paddy yields, milled rice yields and head rice yields, the relative returns to yield protection and revenue protection crop insurance are estimated. Additionally, a policy that is more sensitive to milling deficiencies is explored. Results indicate some advantage for hybrids compared with conventional cultivars as a ratio of indemnities to premiums. A revenue protection policy that would cover adverse milling outcomes would lessen risk marginally.

Suggested Citation

  • Branscum, D. Ethan & Nalley, Lawton L. & Dixon, Bruce L. & Siebenmorgen, Terry J. & Tack, Jesse & Danforth, Diana M., 2014. "Implications of Rice Variety Selection to Optimize Returns from Crop Insurance," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY 184247, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaeacj:184247
    DOI: 10.22004/ag.econ.184247
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    References listed on IDEAS

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    1. Vedenov, Dmitry V. & Power, Gabriel J., 2008. "Risk-Reducing Effectiveness of Revenue versus Yield Insurance in the Presence of Government Payments," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(2), pages 1-17, August.
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    Keywords

    Crop Production/Industries; Production Economics;

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