IDEAS home Printed from https://ideas.repec.org/a/bla/canjag/v53y2005i2-3p103-115.html
   My bibliography  Save this article

Spatial Yield Risk Across Region, Crop and Aggregation Method

Author

Listed:
  • Michael Popp
  • Margot Rudstrom
  • Patrick Manning

Abstract

A researcher interested in crop yield risk analysis often has to contend with a lack of field‐ or farm‐level data. While spatially aggregated yield data are often readily available from various agencies, aggregation distortions for farm‐level analysis may exist. This paper addresses how much aggregation distortion might be expected and whether findings are robust across wheat, canola and flax grown in two central Canadian production regions, differing mainly by rainfall, frost‐free growing days and soil type. Using Manitoba Crop Insurance Corporation data from 1980 to 1990, this research, regardless of crop or region analyzed, indicates that (i) spatial patterns in risk are absent; (ii) use of aggregate data overwhelmingly under‐estimates field‐level yield risk; and (iii) use of a relative risk measure compared to an absolute risk measure leads to slightly less aggregation distortion. Analysts interested in conducting farm‐level analysis using aggregate data are offered a range of adjustment factors to adjust for potential bias. Un chercheur qui s'intéresse à l'analyse du risque du rendement des cultures doit souvent composer avec un manque de micro‐données provenant de l'exploitation. Bien qu'il soit possible d'obtenir des données sur les rendements spatialement cumulées auprès de divers organismes, ces données peuvent comporter des distorsions importantes dues à l'agrégation des données de base et être trompeuses si elles sont utilisées pour effectuer des analyses à l'échelle de l'exploitation. Le présent article traite de la quantité de distorsion due à l'agrégation à laquelle on doit s'attendre et examine si les résultats obtenus pour le blé, le canola et le lin dans deux principales régions productrices canadiennes, où les précipitations, les jours de croissance sans gel et le type de sol constituent les principales différences, sont robustes ou non. À l'aide des données obtenues auprès de la Société d'assurance‐récolte du Manitoba pour la période 1980–1990, la présente étude, sans égard à la culture ou à la région analysée, indique (i) que les profils régionaux en matière de risque n'existent pas; (ii) que l'utilisation de données agrégées sous‐estime considérablement le risque de rendement; (iii) que l'utilisation d'une mesure du risque relatif comparativement à une mesure du risque absolu entraîne légèrement moins de distorsion d'agrégation. Afin d'ajuster les données pour minimiser un biais éventuel, nous proposons une gamme de facteurs d'ajustement aux analystes intéressés à effectuer des analyses à l'échelle des exploitations à l'aide de données agrégées.

Suggested Citation

  • Michael Popp & Margot Rudstrom & Patrick Manning, 2005. "Spatial Yield Risk Across Region, Crop and Aggregation Method," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(2‐3), pages 103-115, June.
  • Handle: RePEc:bla:canjag:v:53:y:2005:i:2-3:p:103-115
    DOI: 10.1111/j.1744-7976.2005.00408.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1744-7976.2005.00408.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1744-7976.2005.00408.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bechtel, Amos I. & Young, Douglas L., 1999. "The Importance Of Using Farm Level Risk Estimates In Crp Enrollment Decisions," 1999 Annual Meeting, July 11-14, 1999, Fargo, ND 35717, Western Agricultural Economics Association.
    2. Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economic Reports 34081, United States Department of Agriculture, Economic Research Service.
    3. Fulton, Joan R. & King, Robert P. & Fackler, Paul L., 1988. "Combining Farm And County Data To Construct Farm Level Yield Distributions," Staff Papers 13752, University of Minnesota, Department of Applied Economics.
    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. Arora, Gaurav & Agarwal, Sandip K., 2020. "Agricultural input use and index insurance adoption: Concept and evidence," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304508, Agricultural and Applied Economics Association.
    2. Schmidt, Lorenz & Odening, Martin & Schlanstein, Johann & Ritter, Matthias, 2021. "Estimation of the Farm-Level Yield-Weather-Relation Using Machine Learning," 61st Annual Conference, Berlin, Germany, September 22-24, 2021 317075, German Association of Agricultural Economists (GEWISOLA).
    3. 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.
    4. Jindřich Špička, 2009. "The Risk Analysis in the Agricultural Enterprises using Earnings at Risk Method," Ekonomika a Management, Prague University of Economics and Business, vol. 2009(3).
    5. Peter Slade, 2021. "The impact of price hedging on subsidized insurance: Evidence from Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(4), pages 447-464, December.
    6. Finger, Robert, 2012. "Biases in Farm-Level Yield Risk Analysis due to Data Aggregation," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(01), pages 1-14, February.
    7. Severini, Simone & Tantari, Antonella & Di Tommaso, Giuliano, 2016. "The instability of farm income. Empirical evidences on aggregation bias and heterogeneity among farm groups," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(1), pages 1-19, April.
    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. 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.
    10. Finger, Robert, 2012. "Biases in Farm-Level Yield Risk Analysis due to Data Aggregation," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(1).
    11. Juan He & Roderick Rejesus & Xiaoyong Zheng & Jose Yorobe, 2018. "Advantageous Selection in Crop Insurance: Theory and Evidence," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 646-668, September.
    12. Christopher N. Boyer & B. Wade Brorsen & Emmanuel Tumusiime, 2015. "Modeling skewness with the linear stochastic plateau model to determine optimal nitrogen rates," Agricultural Economics, International Association of Agricultural Economists, vol. 46(1), pages 1-10, January.
    13. Jindřich Špička & Václav Vilhelm, 2013. "Determinants of the Risk Environment in Agricultural Enterprises in the Czech Republic [Determinanty rizikového prostředí zemědělských podniků v České republice]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2013(2), pages 69-87.
    14. Schmidt, Lorenz & Odening, Martin & Schlanstein, Johann & Ritter, Matthias, 2022. "Exploring the weather-yield nexus with artificial neural networks," Agricultural Systems, Elsevier, vol. 196(C).
    15. Baylis, Katherine R. & Paulson, Nicholas D. & Piras, Gianfranco, 2011. "Spatial Approaches to Panel Data in Agricultural Economics: A Climate Change Application," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 43(3), pages 1-14, August.
    16. Li, Xiaofei & Tack, Jesse B. & Coble, Keith H. & Barnett, Barry J., 2016. "Can Crop Productivity Indices Improve Crop Insurance Rates?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235750, Agricultural and Applied Economics Association.
    17. Santeramo, Fabio Gaetano & Maccarone, Irene, 2022. "Analisi storica delle rese agricole e la variabilità del clima: Analisi dei dati italiani sui cereali [Historical crop yields and climate variability: analysis of Italian cereal data]," MPRA Paper 114135, University Library of Munich, Germany, revised 04 Aug 2022.
    18. Joseph Cooper & Carl Zulauf & Michael Langemeier & Gary Schnitkey, 2012. "Implications of within county yield heterogeneity for modeling crop insurance premiums," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 134-155, May.

    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. Margot Rudstrom & Michael Popp & Patrick Manning & Edward Gbur, 2002. "Data Aggregation Issues for Crop Yield Risk Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 50(2), pages 185-200, July.
    2. Popp, Michael P. & Rudstrom, Margaretha & Manning, Patrick M., 2004. "Spatial Yield Risk Issues: Comparing Yield Risk Across Region, Crop And Aggregation Method," 2004 Annual meeting, August 1-4, Denver, CO 19979, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Brent A. Gloy & Timothy G. Baker, 2002. "The Importance of Financial Leverage and Risk Aversion in Risk-Management Strategy Selection," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1130-1143.
    4. Deane, Paul & Malcolm, Bill, 2006. "Do Australian woolgrowers manage price risk rationally?," AFBM Journal, Australasian Farm Business Management Network, vol. 3(2), pages 1-7.
    5. Ashok Mishra & Barry Goodwin, 2006. "Revenue insurance purchase decisions of farmers," Applied Economics, Taylor & Francis Journals, vol. 38(2), pages 149-159.
    6. Bitsch, Vera & Harsh, Stephen B., 2004. "Labor Risk Attributes in the Green Industry: Business Owners' and Managers' Perspectives," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 36(3), pages 731-745, December.
    7. Aymeric Ricome & Arnaud Reynaud, 2022. "Marketing contract choices in agriculture: The role of price expectation and price risk management," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 170-186, January.
    8. Dilshad Ahmad & Muhammad Afzal & Abdur Rauf, 2019. "Analysis of wheat farmers’ risk perceptions and attitudes: evidence from Punjab, Pakistan," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 95(3), pages 845-861, February.
    9. Asci, Serhat & VanSickle, John J. & Cantliffe, Daniel J., 2014. "Risk in Investment Decision Making and Greenhouse Tomato Production Expansion in Florida," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(4), pages 1-26, November.
    10. Finger, Robert, 2012. "Biases in Farm-Level Yield Risk Analysis due to Data Aggregation," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(01), pages 1-14, February.
    11. Vedenov, Dmitry V. & Power, Gabriel J., 2008. "Risk-Reducing Effectiveness of Revenue versus Yield Insurance in the Presence of Government Payments," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(2), pages 443-459, August.
    12. Gollin, Douglas, 2006. "Impacts of International Research on Intertemporal Yield Stability in Wheat and Maize: An Economic Assessment," Impact Studies 7657, CIMMYT: International Maize and Wheat Improvement Center.
    13. Ramirez, Octavio A. & Carpio, Carlos E., 2015. "Are the Federal Crop Insurance Subsidies Equitably Distributed? Evidence from a Monte Carlo Simulation Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(3), pages 1-19, September.
    14. 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.
    15. Bello, Ibrahim Mohamed, 2016. "Les stratégies de gestion de risques agricoles au Niger. Évidence empirique et implication pour les ménages agricoles," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 351(January-F).
    16. So Pyay Thar & Thiagarajah Ramilan & Robert J. Farquharson & Deli Chen, 2021. "Identifying Potential for Decision Support Tools through Farm Systems Typology Analysis Coupled with Participatory Research: A Case for Smallholder Farmers in Myanmar," Agriculture, MDPI, vol. 11(6), pages 1-20, June.
    17. Huong, Nguyen & Nanseki, Teruaki, 2015. "Households' Risk Perception of Pig Farming in Vietnam: A Case Study in Quynh Phu District, Thai Binh Province," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 17, pages 1-6.
    18. Brandon Schaufele & James R. Unterschultz & Tomas Nilsson, 2010. "AgriStability with Catastrophic Price Risk for Cow‐Calf Producers," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(3), pages 361-380, September.
    19. Anastassiadis, Friederike & Liebe, Ulf & Musshoff, Oliver, 2012. "Finanzielle Flexibilität In Landwirtschaftlichen Investitionsentscheidungen: Ein Discrete Choice Experiment," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137142, German Association of Agricultural Economists (GEWISOLA).
    20. M. Yusuf S. Barusman & Indriati Agustina Gultom & Appin Purisky Redaputri, 2019. "Risk Management of the Joint Partnership Pattern: Case Study of Shrimp Farming in Indonesia," International Review of Management and Marketing, Econjournals, vol. 9(1), pages 72-78.

    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:bla:canjag:v:53:y:2005:i:2-3:p:103-115. 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: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/caefmea.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.