IDEAS home Printed from https://ideas.repec.org/a/oup/apecpp/v32y2010i3p472-488.html
   My bibliography  Save this article

Revenue Risk-Reduction Impacts of Crop Insurance in a Multicrop Framework

Author

Listed:
  • Joshua D. Woodard
  • Bruce J. Sherrick
  • Gary D. Schnitkey

Abstract

The authors develop a multicrop insurance model to evaluate crop insurance decisions when several crops are produced. The results suggest that the diversification effects derived from producing multiple crops can substantially alter the risk-reduction impacts of crop insurance versus if the decision is viewed from the perspective of a single crop. Further, the relatedness of crop production and price responses among crops differs considerably across insurance products and strategies. As a result, insurance strategies that might provide the maximum risk reduction for an individual crop do not necessarily carry over to the multicrop case. Copyright 2010, Oxford University Press.

Suggested Citation

  • Joshua D. Woodard & Bruce J. Sherrick & Gary D. Schnitkey, 2010. "Revenue Risk-Reduction Impacts of Crop Insurance in a Multicrop Framework," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(3), pages 472-488.
    • Handle: RePEc:oup:apecpp:v:32:y:2010:i:3:p:472-488
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/aepp/ppq014
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joshua D. Woodard & Philip Garcia, 2008. "Basis risk and weather hedging effectiveness," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 68(1), pages 99-117, May.
    2. Mattos, Fabio & Garcia, Philip & Nelson, Carl, 2008. "Relaxing standard hedging assumptions in the presence of downside risk," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(1), pages 78-93, February.
    3. Bruce J. Sherrick & Fabio C. Zanini & Gary D. Schnitkey & Scott H. Irwin, 2004. "Crop Insurance Valuation under Alternative Yield Distributions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 406-419.
    4. Miller, J. Corey & Coble, Keith H. & Barnett, Barry J., 2000. "Investigating The Implications Of Multi-Crop Revenue Insurance For Producer Risk Management," Professional Presentations 15802, Mississippi State University, Department of Agricultural Economics.
    5. Coble, Keith H. & Heifner, Richard G. & Zuniga, Manuel, 2000. "Implications Of Crop Yield And Revenue Insurance For Producer Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-21, December.
    6. Scott M. Swinton & Robert P. King, 1991. "Evaluating Robust Regression Techniques for Detrending Crop Yield Data with Nonnormal Errors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 446-451.
    7. Keith H. Coble, 2004. "The joint effect of government crop insurance and loan programmes on the demand for futures hedging," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 31(3), pages 309-330, September.
    8. Barry J. Barnett & Dmitry V. Vedenov, 2007. "Is There a Viable Market for Area-Based Crop Insurance?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 508-519.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jansen, Jim A. & Stockton, Matthew C. & Lubben, Bradley D., 2012. "Modeling Correlated and Disaggregated Crop Revenue Distributions: Implications under Mixed Policy and Program Initiatives," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124688, Agricultural and Applied Economics Association.
    2. Preston, Richard & Walters, Cory G., 2015. "Risk Management Properties of the 2014 Farm Bill," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206435, Agricultural and Applied Economics Association.
    3. Ying-Erh Chen & Barry K Goodwin, 2015. "Policy Design of Multi-Year Crop Insurance Contracts with Partial Payments," PLOS ONE, Public Library of Science, vol. 10(12), pages 1-15, December.
    4. Dolginow, Joseph & Massey, Raymond E. & Myers, Brent & Kitchen, Newell, 2013. "Adjusting Crop Insurance APH Calculation to Accommodate Biomass Production," 2013 AAEA: Crop Insurance and the Farm Bill Symposium 156945, Agricultural and Applied Economics Association.
    5. Fei Chen & Xiang-Long Xu & Zhan Yang & Hua-Wei Tan & Liang Zhang, 2015. "The Willingness-to-Pay for General Practitioners in Contractual Service and Influencing Factors among Empty Nesters in Chongqing, China," IJERPH, MDPI, vol. 12(8), pages 1-12, August.
    6. Zaura Fadhliani & Jeff Luckstead & Eric J. Wailes, 2019. "The impacts of multiperil crop insurance on Indonesian rice farmers and production," Agricultural Economics, International Association of Agricultural Economists, vol. 50(1), pages 15-26, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mitchell, Paul D. & Knight, Thomas O., 2008. "Economic Analysis of Supplemental Deductible Coverage as Recommended in the USDA's 2007 Farm Bill Proposal," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(1), pages 1-15, April.
    2. Walters, Cory G. & Preston, Richard, 2013. "Revenue Risk, Crop Insurance and Forward Contracting," 2013 AAEA: Crop Insurance and the Farm Bill Symposium 156821, Agricultural and Applied Economics Association.
    3. Tor N. Tolhurst & Alan P. Ker, 2015. "On Technological Change in Crop Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 137-158.
    4. Zhang, Rui (Carolyn) & Houston, Jack E. & Vedenov, Dmitry V. & Barnett, Barry J., 2008. "Impacts of government risk management policies on hedging in futures and options:LPM2 hedge model vs. EU hedge model," 2008 Conference, April 21-22, 2008, St. Louis, Missouri 37610, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    5. Vedenov, Dmitry V., 2008. "Application of Copulas to Estimation of Joint Crop Yield Distributions," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6264, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Gerlt, Scott & Thompson, Wyatt & Miller, Douglas, 2014. "Exploiting the Relationship between Farm-Level Yields and County-Level Yields for Applied Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-18.
    7. Chen, Xiaomei & Wang, H. Holly & Makus, Larry D., 2007. "Production Risk and Crop Insurance Effectiveness: Organic Versus Conventional Apples," SCC-76 Meeting, 2007, March 15-17, Gulf Shores, Alabama 9381, SCC-76: Economics and Management of Risk in Agriculture and Natural Resources.
    8. Zhiwei Shen & Martin Odening, 2013. "Coping with systemic risk in index-based crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 44(1), pages 1-13, January.
    9. Ramirez, Octavio A. & Carpio, Carlos E. & Rejesus, Roderick M., 2011. "Can Crop Insurance Premiums Be Reliably Estimated?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(1), pages 1-14, April.
    10. Yang, Xi & Miao, Ruiqing & Khanna, Madhu, 2014. "Contracting in the Presence of Insurance: The Case of Bioenergy Crop Production," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170188, Agricultural and Applied Economics Association.
    11. David A. Hennessy, 2009. "Crop Yield Skewness Under Law of the Minimum Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 197-208.
    12. Hennessy, David A., 2009. "Crop Yield Skewness and the Normal Distribution," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-19, April.
    13. Gerlt, Scott & Westhoff, Patrick, 2013. "Analysis of the Supplemental Coverage Option," 2013 AAEA: Crop Insurance and the Farm Bill Symposium 156704, Agricultural and Applied Economics Association.
    14. Arata, Linda & Fabrizi, Enrico & Sckokai, Paolo, 2020. "A worldwide analysis of trend in crop yields and yield variability: Evidence from FAO data," Economic Modelling, Elsevier, vol. 90(C), pages 190-208.
    15. Ozaki, Vitor & Campos, Rogério, 2017. "Reduzindo a Incerteza no Mercado de Seguros: Uma Abordagem via Informações de Sensoriamento Remoto e Atuária," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 71(4), December.
    16. Gerlt, Scott & Westhoff, Patrick, "undated". "Comparison of County ARC and SCO," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY 184289, Agricultural and Applied Economics Association.
    17. Jesse B. Tack & David Ubilava, 2015. "Climate and agricultural risk: measuring the effect of ENSO on U.S. crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 245-257, March.
    18. Woodard, Joshua D. & Garcia, Philip, 2008. "Weather Derivatives, Spatial Aggregation, and Systemic Risk: Implications for Reinsurance Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(1), pages 1-18, April.
    19. William E. Maples & Anil K. Giri & Keith H. Coble & Dipak Subedi, 2022. "Impact of government programs on producer demand for hedging," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1126-1138, September.
    20. Boyer, Christopher M. & Lambert, Dayton M. & Larson, James A. & Tyler, Donald, 2017. "Investment Analysis of Long-term Cover Crops and Tillage Systems on Cotton Production," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258525, Agricultural and Applied Economics Association.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:apecpp:v:32:y:2010:i:3:p:472-488. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.