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Linkages Between Crop Insurance and Pre-Harvest Hedging

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  • Dhuyvetter, Kevin C.
  • Kastens, Terry L.

Abstract

The impact pre-harvest hedging and crop insurance strategies have on expected revenue and associated risk as well as how producers' risk attitudes affect optimal strategies was analyzed for Kansas wheat farms. No insurance, Catastrophic (CAT), Actual Production History (APH), and Crop Revenue Coverage (CRC) were considered. Average revenue was similar across alternatives, but APH and CRC resulted in the least income variability. Risk reduction effects of hedging were small and the advantage of CRC over APH decreases as hedging increases. This historical study provides useful information; however, if future market conditions differ significantly from the past, optimal strategies may change.

Suggested Citation

  • Dhuyvetter, Kevin C. & Kastens, Terry L., 1999. "Linkages Between Crop Insurance and Pre-Harvest Hedging," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(1), pages 41-56, April.
    • Handle: RePEc:cup:jagaec:v:31:y:1999:i:01:p:41-56_02
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    2. Makus, Larry D. & Wang, H. Holly & Chen, Xiaomei, 2003. "Evaluating Risk Management Strategies For Non-Irrigated Small Grain Producers," 2003 Annual meeting, July 27-30, Montreal, Canada 22257, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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