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Farmer Participation, Entry and Exit decisions in the Italian Crop Insurance Program

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  • Santeramo, Fabio Gaetano
  • Adinolfi, Felice
  • Capitanio, Fabian
  • Goodwin, Barry K.

Abstract

The factors affecting the demand for agricultural insurance in the US have been extensively studied over the last two decades. However, the determinants of a farm’s entry and exit decisions in the insurance market have received relatively little attention. Turnover in the insurance book of business is an important issue in most private and public crop insurance plans. Moreover, insurance markets in the EU are still largely under-investigated. We investigate empirically the determinants of crop insurance participation in Italy. We show that the participation rate is high for large firms and that it is negatively correlated with crop diversification, which is itself a form of insurance. High premiums tend to inhibit both entry and exit from the insurance market. Larger and wealthier farms are more likely to adopt insurance and renew coverage over time. We discuss implications of our results for public intervention and the private industry. In particular, we demonstrate that the decision to drop coverage by an insured grower may differ significantly from the corresponding decision to enroll in an insurance program by an uninsured farmer. To the extent that policymakers want to encourage participation in subsidized crop insurance programs, education and outreach efforts toward uninsured farmers may differ substantially from those directed toward keeping insured farmers enrolled in the program. We investigate these differences.

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  • Santeramo, Fabio Gaetano & Adinolfi, Felice & Capitanio, Fabian & Goodwin, Barry K., 2016. "Farmer Participation, Entry and Exit decisions in the Italian Crop Insurance Program," MPRA Paper 69508, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:69508
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    Cited by:

    1. Myyrä, Sami, 2016. "Latent farmer groups in yield insurance markets and implications for policy measures," 156th Seminar, October 4, 2016, Wagenigen, The Netherlands 249986, European Association of Agricultural Economists.
    2. Liguo Zhang & Xuerong Li, 2016. "The Impact of Traditional Culture on Farmers’ Moral Hazard Behavior in Crop Production: Evidence from China," Sustainability, MDPI, Open Access Journal, vol. 8(7), pages 1-15, July.
    3. repec:ucp:mresec:doi:10.1086/692091 is not listed on IDEAS
    4. Santeramo, Fabio Gaetano & Carlucci, Domenico & De Devitiis, Biagia & Nardone, Gianluca & Viscecchia, Rosaria, 2017. "On consumption patterns in oyster markets: the role of attitudes," MPRA Paper 76789, University Library of Munich, Germany.
    5. Ramsey, Austin Ford & Santeramo, Fabio Gaetano, 2017. "Crop Insurance in the European Union: Lessons and Caution from the United States," MPRA Paper 79164, University Library of Munich, Germany.
    6. Soliwoda, Michal, 2016. "Crop and livestock insurance in Poland reconsidered: challenges from the perspective of agricultural policy," 156th Seminar, October 4, 2016, Wagenigen, The Netherlands 249991, European Association of Agricultural Economists.
    7. Santeramo, Fabio Gaetano, 2017. "Imperfect Information and Participation in Insurance Markets: Evidence from Italy," MPRA Paper 85780, University Library of Munich, Germany.
    8. Galluzzo, Nicola, 1. "Role And Effect Of Agroforesty Subsides Allocated By The Common Agricultural Policy In Italian Farms," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 3(1).
    9. Carlucci, Domenico & Dedevitiis, Biagia & Nardone, Gianluca & Santeramo, Fabio Gaetano, 2016. "Certification Labels Vs Convenience Formats: What drives the market in aquaculture products?," MPRA Paper 75448, University Library of Munich, Germany.

    More about this item

    Keywords

    Agricultural Policy; Risk Management; Insurance; Turnover;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • 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
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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