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Rankings of Risk Management Strategies Combining Crop Insurance Products and Marketing Positions

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Abstract

Farmers can choose from a wide selection of crop insurance products and marketing strategies. Combinations of these risk management tools have varying effects on the user's risk environment. In this paper, the authors rank nine risk management strategies for their impacts on average returns, certainty equivalent returns, and risk premiums. The analysis is conducted using historical price and yield data for 1976 to 1999 in five Iowa counties. The results show the benefits of crop insurance in reducing revenue risk. Also, given that the producer will forward contract some of his or her crop, the combination of E-Markets' Decision Rules for Contracts (DRC) pricing tool and Crop Revenue Coverage (CRC) crop insurance receives the highest ranking.

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  • Chad E. Hart & Bruce A. Babcock, 2001. "Rankings of Risk Management Strategies Combining Crop Insurance Products and Marketing Positions," Center for Agricultural and Rural Development (CARD) Publications 01-wp267, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:01-wp267
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    Cited by:

    1. Martial Phélippé-Guinvarc’H & Jean Cordier, 2010. "An option on the average European futures prices for an efficient hog producer risk management," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 91(1), pages 27-42.
    2. Schnitkey, Gary D. & Sherrick, Bruce J. & Irwin, Scott H., 2002. "Evaluation Of Risk Reductions Associated With Multi-Periol Crop Insurance Products," 2002 Annual meeting, July 28-31, Long Beach, CA 19778, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Reich, Denis Andrew, 2007. "Evaluating the Conservation Security Program utilizing the perceptions and economics of producer participation: implications for land stewardship in Iowa agriculture," ISU General Staff Papers 2007010108000016024, Iowa State University, Department of Economics.
    4. Barnard, Freddie L. & Yeager, Elizabeth, 2013. "The Perfect Storm: A Case Study Illustrating How a Series of Events Led One Farm Operator to Develop a Risk Management Plan that Includes a Lender’s Perspective," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2013, pages 1-15, June.

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