AREA-MEASURED CROP INSURANCE AND DISASTER AID FOR WHEAT AND GRAIN SORGHUM

Jeffery Williams, Gordon L. Carriker, G. Art Barnaby, Jayson K. Harper and J. Roy Black

No 271256, 1991 Annual Meeting, August 4-7, Manhattan, Kansas from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Area crop insurance and disaster aid program designs are compared to an individual farm-yield insurance design like the current FCIC multiple peril program. Stochastic dominance analysis of net return distributions for 45 wheat and grain sorghum farms in southcentral Kansas is used to determine which strategy is preferred. The area disaster aid program is preferred by generally risk-averse managers over the individual farm-yield design for wheat and sorghum. When individual farm crop insurance is compared directly with ~rea crop insurance, given an equivalent level of government liability for each, individual insurance is usually preferred by risk-averse managers. When the premium for the area insurance is subsidized by 10 percent or more, slightly risk-averse managers usually prefer area insurance to full-cost individual insurance. For area crop insurance to be preferred by managers that are more strongly risk averse, a higher subsidy level is required.

Keywords: Agricultural Finance; Crop Production/Industries (search for similar items in EconPapers)
Pages: 26
Date: 1991-08-04
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea91:271256

DOI: 10.22004/ag.econ.271256

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