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Modelling farmer participation to a revenue insurance scheme by the means of the Positive Mathematical Programming

Author

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  • Raffaele CORTIGNANI

    (DAFNE, University of Tuscia, Viterbo, Italy)

  • Simone SEVERINI

    (DAFNE, University of Tuscia, Viterbo, Italy)

Abstract

European farmers face an increasing income uncertainty. The debate is growing on the role of the insurance schemes and on the support provided by the CAP in this field. Therefore, there is a need for the empirical analysis and the tools aimed at providing empirical evidences on this subject. This paper develops an innovative Positive Mathematical Programming model that takes into explicit consideration the risk aversion behaviour. This is used to investigate the implications of participating in the crop revenue insurance scheme. In particular, a quadratic mix integer program has been developed on a small group of crop farms in Italy and it has been used to simulate the impact of changes in the level of the insurance premium. The objective of this paper is to assess the soundness of the proposed approach and to identify its limitations. The obtained results suggest that this could be a useful tool to investigate the impact of participating in insurance schemes on production patterns, farm profitability and the role of public support.

Suggested Citation

  • Raffaele CORTIGNANI & Simone SEVERINI, 2012. "Modelling farmer participation to a revenue insurance scheme by the means of the Positive Mathematical Programming," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(7), pages 324-331.
    • Handle: RePEc:caa:jnlage:v:58:y:2012:i:7:id:127-2011-agricecon
    DOI: 10.17221/127/2011-AGRICECON
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    Cited by:

    1. Basnet, Shyam Kumar & Jansson , Torbjorn & Heckelei, Thomas, 2021. "A Bayesian econometrics and risk programming approach for analysing the impact of decoupled payments in the European Union," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(03), January.
    2. Liang ZHAO & Yueying MU & Bo SONG & Qiao ZHANG, 2016. "Market equilibrium of the agricultural product target price insurance and its moral hazard premium," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(5), pages 215-224.

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