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

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.


Issue Date:
Aug 04 1991
Publication Type:
Conference Paper/ Presentation
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/271256
Language:
English
Total Pages:
26




 Record created 2018-04-12, last modified 2020-10-28

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