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Revenue Protection for Organic Producers: Too Much or Too Little

Author

Listed:
  • Singerman, Ariel
  • Hart, Chad E.
  • Lence, Sergio H.

Abstract

A framework is developed to examine organic crop insurance established by the Risk ManagementAgency (RMA). Given that the RMA links organic and conventional crop prices, the modelis calibrated to reflect both markets to illustrate the impacts that pricing has on insurancecoverage. Findings indicate that at the 75% coverage level, the RMA's fixed-price factor impliesan effective coverage ranging from 43% to 105% depending on the ratio of planting-time organicto conventional market prices. Results suggest the RMA's program is likely to induce adverseselection because the nominal coverage level is likely to deviate substantially from the effectivecoverage.

Suggested Citation

  • Singerman, Ariel & Hart, Chad E. & Lence, Sergio H., 2012. "Revenue Protection for Organic Producers: Too Much or Too Little," Staff General Research Papers Archive 35964, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:35964
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    Cited by:

    1. F. G. Santeramo & B. K. Goodwin & F. Adinolfi & F. Capitanio, 2016. "Farmer Participation, Entry and Exit Decisions in the Italian Crop Insurance Programme," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 639-657, September.
    2. Saed Alizamir & Foad Iravani & Hamed Mamani, 2019. "An Analysis of Price vs. Revenue Protection: Government Subsidies in the Agriculture Industry," Management Science, INFORMS, vol. 65(1), pages 32-49, January.
    3. Fabio G Santeramo, 2019. "I Learn, You Learn, We Gain Experience in Crop Insurance Markets," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(2), pages 284-304, June.
    4. Delbridge, Timothy A. & King, Robert P., 2016. "How Important is the T-Yield? An Analysis of Reforms to Organic Crop Insurance," Staff Papers 244732, University of Minnesota, Department of Applied Economics.
    5. Skorbiansky, Sharon Raszap & Astill, Gregory & Rosch, Stephanie & Higgins, Elizabeth & Ifft, Jennifer & Rickard, Bradley, . "Specialty Crop Participation in Federal Risk Management Programs," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, vol. 2022(Economic ).
    6. Fabio Gaetano Santeramo, 2018. "Imperfect information and participation in insurance markets: evidence from Italy," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 78(2), pages 183-194, February.

    More about this item

    Keywords

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    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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