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Abstract
In 2011 and 2012 severe droughts caused extensive damage in crops throughout
the Midwest. These conditions combined with concerns for climate change
have led to a growing focus on risk management in agriculture. The increasing
emphasis on risk management is reflected in the 2014 Farm Bill, which replaces
direct payments with shallow loss programs. For this paper we turn our attention
to winter wheat production in Kansas and explore the ratings of the crop
insurance policies as well as predicted payouts from the new Agricultural Risk
Coverage program established under the 2014 Farm Bill. Using spatial models
we simulate yields of non-irrigated winter wheat and irrigated winter wheat to
estimate crop insurance premium rates as well as payouts from the Agricultural
Risk Coverage program.