Implications of Crop Insurance for Farmers and Lenders

David Leatham (), Bruce McCarl and James Richardson ()

Journal of Agricultural and Applied Economics, 1987, vol. 19, issue 2, 113-120

Abstract: The effect of the farmer's choice of crop insurance was evaluated on both the farmer's and lender's performance. This was done using whole-farm, Monte Carlo simulation for Texas wheat/sorghum operations. Results indicate crop insurance would be preferred by moderately risk-averse farmers when farm firm failure became an issue or the insurance loss ratio approached one. A lender always preferred the use of crop insurance, especially when the probability of firm bankruptcy was an issue.

Date: 1987
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