The Effects of Area-based Revenue Protection on Producers’ Choices of Farm-level Revenue Insurance
Keith Coble (),
Corey Miller and
No 149545, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association
Producers’ increased reliance on crop insurance has led to concerns about losses producers could incur that are not covered by crop insurance. In the current farm bill debate, several proposals that would be based on area (county) revenue and are intended to cover a portion of producers’ crop insurance deductibles, referred to as “shallow loss” programs, have been advanced. We analyze, using an empirically-based simulation model and a certainty equivalent criterion, how shallow loss coverages might affect optimal coverage levels of farm-level revenue insurance for a moderately risk-averse producer. Our analysis suggests that area-based revenue insurance designs have some potential for causing producers to reduce coverage levels for farm-level revenue insurance, though the marginal differences in the certainty equivalents are often relatively small on a percentage basis.
Keywords: Agricultural Finance; Farm Management (search for similar items in EconPapers)
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