IDEAS home Printed from https://ideas.repec.org/p/ags/eaa123/122537.html
   My bibliography  Save this paper

Feasibility of the Income Stabilisation Tool in Finland

Author

Listed:
  • Liesivaara, Petri
  • Myyra, Sami
  • Jaakkola, Antti

Abstract

Whole-farm income insurances are promoted in the new post-2013 Common Agricultural Policy (CAP). The current Crop Damage Compensation (CDC) scheme in Finland covers crop failure for farmers who have suffered losses and applied for the payments. This paper analyses the use of the Income Stabilisation Tool (IST) and compares it to the current CDC scheme in Finland. The Finnish Farm Accountancy Data Network (FADN) is used to simulate the costs of IST compensation payments. Special attention is paid to pig farms and their possibilities to manipulate the IST. Results show that the IST is triggered with a high frequency on Finnish farms. The IST would be more costly than the current CDC programme. The results also suggest that the IST would act as an income transfer policy if farmers could influence their annual income. However, the efficiency of the IST as an income transfer policy is questionable due to its large transaction cost.

Suggested Citation

  • Liesivaara, Petri & Myyra, Sami & Jaakkola, Antti, 2012. "Feasibility of the Income Stabilisation Tool in Finland," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122537, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa123:122537
    DOI: 10.22004/ag.econ.122537
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/122537/files/Liesivaara.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.122537?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. Michael J. Roberts & Nigel Key & Erik O'Donoghue, 2006. "Estimating the Extent of Moral Hazard in Crop Insurance Using Administrative Data," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 381-390.
    2. Vincent H. Smith & Barry K. Goodwin, 1996. "Crop Insurance, Moral Hazard, and Agricultural Chemical Use," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 428-438.
    3. Jesús Antón & Shingo Kimura & Roger Martini, 2011. "Risk Management in Agriculture in Canada," OECD Food, Agriculture and Fisheries Papers 40, OECD Publishing.
    4. James Rude & Alan Ker, 2013. "Transfer Efficiency Analysis of Margin-Based Programs," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 61(4), pages 509-529, December.
    5. Kimura, Shingo & Anton, Jesus, 2011. "Farm Income Stabilization and Risk Management: Some Lessons from AgriStability Program in Canada," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114755, European Association of Agricultural Economists.
    6. 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.
    7. Robert G. Chambers, 1989. "Insurability and Moral Hazard in Agricultural Insurance Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(3), pages 604-616.
    8. Myyra, Sami & Pietola, Kyosti, 2011. "Testing for Moral Hazard and Ranking Farms by Their Inclination to Collect Crop Damage Compensations," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114632, European Association of Agricultural Economists.
    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. Severini, Simone & Biagini, Luigi & Finger, Robert, 2019. "Modeling agricultural risk management policies – The implementation of the Income Stabilization Tool in Italy," Journal of Policy Modeling, Elsevier, vol. 41(1), pages 140-155.
    2. Liesivaara, Petri & Myyrä, Sami, 2016. "Income stabilisation tool and the pig gross margin index for the Finnish pig sector," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236360, Agricultural Economics Society.

    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. 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.
    2. repec:ags:aaea22:335431 is not listed on IDEAS
    3. Rao, Xudong & Cai, Qingyin & Zhang, Yuehua, 2021. "Moral Hazard in Compulsory Insurance – Evidence from a Quasi-Experiment on Hog Insurance in China," 2021 Conference, August 17-31, 2021, Virtual 315356, International Association of Agricultural Economists.
    4. Chemeris, Anna & Liu, Yong & Ker, Alan P., 2022. "Insurance subsidies, climate change, and innovation: Implications for crop yield resiliency," Food Policy, Elsevier, vol. 108(C).
    5. Vigani, Mauro & Khafagy, Amr & Berry, Robert, 2024. "Public spending for agricultural risk management: Land use, regional welfare and intra-subsidy substitution," Food Policy, Elsevier, vol. 123(C).
    6. Deng, Xiaohui & Barnett, Barry J. & Hoogenboom, Gerrit & Yu, Yingzhuo & Garcia, Axel Garcia y, 2008. "Alternative Crop Insurance Indexes," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(1), pages 223-237, April.
    7. Barnett, Barry J. & Barrett, Christopher B. & Skees, Jerry R., 2008. "Poverty Traps and Index-Based Risk Transfer Products," World Development, Elsevier, vol. 36(10), pages 1766-1785, October.
    8. Coleman, Jane A. & Shaik, Saleem, 2009. "Time-Varying Estimation of Crop Insurance Program in Altering North Dakota Farm Economic Structure," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49516, Agricultural and Applied Economics Association.
    9. Glauber, Joseph W., 2017. "Agricultural insurance and the WTO:," IFPRI book chapters, in: Bouët, Antoine & Laborde Debucquet, David (ed.), Agriculture, development, and the global trading system: 2000– 2015, chapter 10, International Food Policy Research Institute (IFPRI).
    10. Bokusheva, Raushan, 2004. "Crop insurance in transition: a qualitative and quantitative assessment of insurance products," IAMO Discussion Papers 76, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    11. Liesivaara, Petri & Myyrä, Sami, 2014. "Government policies in changing climate and the demand for crop insurance," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170520, Agricultural Economics Society.
    12. Sankalp Sharma & Cory G. Walters, 2020. "Influence of farm size and insured type on crop insurance returns," Agribusiness, John Wiley & Sons, Ltd., vol. 36(3), pages 440-452, June.
    13. Joseph A. Atwood & James F. Robison-Cox & Saleem Shaik, 2006. "Estimating the Prevalence and Cost of Yield-Switching Fraud in the Federal Crop Insurance Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 365-381.
    14. Rakhal Sarker & Truc Phan & Yu Na Lee & Alfons Weersink, 2022. "Business Risk Management Program and risk‐balancing in Ontario hog sector: An empirical analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(4), pages 287-304, December.
    15. He, Juan & Zheng, Xiaoyong & Rejesus, Roderick M. & Yorobe Jr., Jose M., 2019. "Moral hazard and adverse selection effects of cost-of-production crop insurance: evidence from the Philippines," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(01), January.
    16. Poon, Kenneth, 2013. "Risky Business: Factors Affecting Participation Rate of AgriStability," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150978, Agricultural and Applied Economics Association.
    17. Deryugina, Tatyana, 2012. "Does Selection in Insurance Markets Always Favor Buyers?," MPRA Paper 53583, University Library of Munich, Germany.
    18. Tang, Lin & Luo, Xiaofeng, 2021. "Can agricultural insurance encourage farmers to apply biological pesticides? Evidence from rural China," Food Policy, Elsevier, vol. 105(C).
    19. Feng, Shuaizhang & Han, Yujie & Qiu, Huanguang, 2021. "Does crop insurance reduce pesticide usage? Evidence from China," China Economic Review, Elsevier, vol. 69(C).
    20. Soliwoda, Michał & Kulawik, Jacek & Góral, Justyna, 2016. "Stabilizacja dochodów rolniczych. Perspektywa międzynarodowa, Unii Europejskiej i Polski," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 3(172), January.
    21. Rejesus, Roderick M. & Lovell, Ashley C. & Little, Bertis B. & Cross, Mike H., 2003. "Determinants of Anomalous Prevented Planting Claims: Theory and Evidence from Crop Insurance," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 32(2), pages 1-15, October.

    More about this item

    Keywords

    Farm Management; Risk and Uncertainty;

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ags:eaa123:122537. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.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.