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Alternative Strategies to Manage Weather Risk in Perennial Fruit Crop Production

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  • Ho, Shuay-Tsyr
  • Ifft, Jennifer E.
  • Rickard, Bradley J.
  • Turvey, Calum G.

Abstract

Fruit producers in the Eastern United States face a wide range of weather-related risks during the growing season, and many of these events have the capacity to largely impact yields and profitability. This research examines the economic implications associated with responding to these risks for sweet cherry production in three different systems: using high tunnels to protect the crop, purchasing revenue insurance products, and employing weather insurance schemes. The analysis considers a distribution of revenue flows and costs using detailed price, yield, and weather data between 1984 and 2013. Our results show that the high tunnel system generates the largest net return if significant price premiums exist for earlier and larger fruit. Under most conditions, the results also indicate that net returns for the system that uses revenue-based crop insurance exceed those for the system that uses weather insurance products.

Suggested Citation

  • Ho, Shuay-Tsyr & Ifft, Jennifer E. & Rickard, Bradley J. & Turvey, Calum G., 2016. "Alternative Strategies to Manage Weather Risk in Perennial Fruit Crop Production," Working Papers 250036, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:250036
    DOI: 10.22004/ag.econ.250036
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    References listed on IDEAS

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    1. Richards, Timothy J. & Manfredo, Mark R., 2003. "Infrequent Shocks and Rating Revenue Insurance: A Contingent Claims Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-19, August.
    2. Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153, Elsevier.
    3. Price, T. Jeffrey & Wetzstein, Michael E., 1999. "Irreversible Investment Decisions In Perennial Crops With Yield And Price Uncertainty," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), pages 1-13, July.
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    5. Feng Song & Jinhua Zhao & Scott M. Swinton, 2011. "Switching to Perennial Energy Crops Under Uncertainty and Costly Reversibility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 764-779.
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    8. Curtis, Kynda R. & Yeager, Irvin & Black, Brent & Drost, Daniel & Ward, Ruby, 2014. "Market and Pricing Potential for Extended Season Fresh Produce Sales: An Intermountain West Example," Journal of Food Distribution Research, Food Distribution Research Society, vol. 45(2), pages 1-20, July.
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    11. Belasco, Eric J. & Galinato, Suzette P. & Marsh, Tom & Miles, Carol & Wallace, Russell, 2013. "High Tunnels Are My Crop Insurance: An Assessment of Risk Management Tools for Small-scale Specialty Crop Producers," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(2), pages 1-16, August.
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    Cited by:

    1. Marco Rogna & Günter Schamel & Alex Weissensteiner, 2023. "Modelling the switch from hail insurance to antihail nets," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(1), pages 118-136, January.
    2. Shuoli Zhao & Chengyan Yue, 2020. "Risk preferences of commodity crop producers and specialty crop producers: An application of prospect theory," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 359-372, May.

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