EconPapers    
Economics at your fingertips  
 

Proposed Farm Bill Impact On The Optimal Hedge Ratios For Crops

Trang Tran, Keith Coble (), Ardian Harri, Barry Barnett () and John Michael Riley

No 143050, 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida from Southern Agricultural Economics Association

Abstract: Revenue insurance with shallow loss protection for farmers has been introduced recently. A common attribute of most shallow loss proposals is that they would be area-revenue triggered. The impact on optimal hedge ratios of combining these shallow loss insurance proposals with deep loss farm-level insurance is examined. Since crop insurance, commodity programs and forward pricing are commonly used concurrently to manage crop revenue risk, the optimal combinations of these tools are explored. Numerical analysis in the presence of yield, basis and futures price variability is used to find the futures hedge ratio which maximizes the certainty equivalent of a risk averse producer. The results generally reveal a lower optimal hedge ratio with area-insurance than with individual insurance and show that STAX and ARC tend to slightly increase optimal hedge ratios.

Keywords: Agricultural Finance; Farm Management; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 23
Date: 2013
New Economics Papers: this item is included in nep-agr, nep-cmp, nep-ias and nep-rmg
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://ageconsearch.umn.edu/record/143050/files/2 ... ang%20Tran%20MSU.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:saea13:143050

DOI: 10.22004/ag.econ.143050

Access Statistics for this paper

More papers in 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida from Southern Agricultural Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().

 
Page updated 2021-04-20
Handle: RePEc:ags:saea13:143050