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The Actuarial Performance of Prevented Planting Buy-Up Coverage

Author

Listed:
  • Turner, Dylan
  • Tsiboe, Francis

Abstract

On November 28, 2025, the USDA Risk Management Agency finalized the elimination of the 5% prevented planting (PP) buy-up option. Using policy-level data from 2011–2024, this brief examines whether buy-up coverage historically degraded the actuarial performance of the Federal Crop Insurance Program. While theory suggest that optional PP coverage could lead to adverse selection, national-level results show that buy-up loss ratios (0.818) were lower than base coverage (0.866). These findings suggest that buy-up premiums adequately covered additional indemnities.

Suggested Citation

  • Turner, Dylan & Tsiboe, Francis, 2026. "The Actuarial Performance of Prevented Planting Buy-Up Coverage," ARPC Brief 387586, North Dakota State University.
    • Handle: RePEc:ags:arpcbr:387586
    DOI: 10.22004/ag.econ.387586
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    File URL: https://ageconsearch.umn.edu/record/387586/files/ARPC%20Brief%202026-01.pdf
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    References listed on IDEAS

    as
    1. Dylan Turner & Francis Tsiboe & Hunter Biram & Lawson Connor, 2025. "Actuarial implications of prevented planting coverage," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 47(1), pages 394-415, March.
    2. Shenan Wu & Barry K. Goodwin & Keith Coble, 2020. "Moral hazard and subsidized crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 131-142, January.
    3. Boyer, Christopher N. & Smith, S. Aaron, . "Evaluating Changes to Prevented Planting Provision on Moral Hazard," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 51(2).
    4. Boyer, Christopher N. & Aaron Smith, S., 2019. "Evaluating Changes to Prevented Planting Provision on Moral Hazard," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 51(2), pages 315-327, May.
    5. Taehoo Kim & Man‐Keun Kim, 2018. "Ex‐post moral hazard in prevented planting," Agricultural Economics, International Association of Agricultural Economists, vol. 49(6), pages 671-680, November.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Tsiboe, Francis & Chakravorty, Rwit & Turner, Dylan & Arita, Shawn & Zhao, Hongxi, 2026. "Prevented Planting Buy-Up Elimination and What the Evidence Indicates about Adoption, Actuarial Performance, and Pre-Planting Risk Management Options for Farmers," ARPC White Paper 388968, North Dakota State University.

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