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Abstract
Yield and price instability and covariate risks have been examined for
major oilseeds, viz. groundnut, rapeseed/mustard, sunflower and soybean,
in selected states of India using time series data. Risk behaviour and effects
of price and price risk on production have been analyzed in a rational
expectations framework. The study has also estimated social gains from
yield and revenue insurance in oilseeds. While instabilities in yield, prices
and gross return have shown mixed responses, covariate risks have
increased. The results of econometric analysis have indicated that the
expected prices and price risk are important determinants of oilseeds
production. Price elasticities of oilseed production have been found to
vary between 0.26 and 0.88 and price risk elasticities of production between
–0.006 and –0.07 in different Indian states. The potential efficiency gains
from insurance schemes based on rainfall and other meteorological
variables have been estimated to be 17.5 to 43 per cent over self-insurance
in oilseeds production.