THE FEDERAL CROP INSURANCE PROGRAM: OPPORTUNITIES AND CHALLENGES

Risk and Uncertainty,

Efficiency of Weather Derivatives as Primary Crop Insurance Instruments

This study analyzes efficiency of weather derivatives as primary insurance instruments for six crop reporting districts that are among the largest producers of corn, cotton, and soybeans in the United States. Specific weather derivatives are constructed for each crop/district combination based on analysis of several econometric models. The performance of the designed weather derivatives is then analyzed both in- and out-of-sample. The primary findings suggest that the optimal structure of weather derivatives varies widely across crops and regions, as does the risk-reducing performance of the optimally designed weather derivatives. Further, optimal weather derivatives required rather complicated combinations of weather variables to achieve reasonable fits between weather and yield.agricultural risk management, crop insurance, index insurance, weather derivatives, Risk and Uncertainty,

Implications of Integrated Commodity Programs and Crop Insurance

Moving from price-triggered to area revenue–triggered programs was perhaps the most common theme among 2007 farm bill proposals. Area revenue–triggered commodity programs may make farm-level revenue insurance products seem redundant, raising questions about why the federal government should continue both programs. Area revenue–triggered programs would remove much of the systemic risk faced by producers. As a result, private sector insurers may be able to insure the residual risk without federal involvement. This paper examines the effects of moving to area revenue–triggered commodity programs with a focus on public policy issues that would likely arise.commodity programs, revenue insurance, systemic risk, Agribusiness, Crop Production/Industries, Productivity Analysis, D81, G22, Q18,

Are Our Agricultural Risk Management Tools Adequate for a New Era?

risk, commodity programs, insurance, Agricultural Finance, Risk and Uncertainty, D80, G11, Q18,

Evaluating a Proposed Modification to Federal Crop Insurance

A proposed modification to the Federal Crop Insurance Program would allow crop producers to simultaneously purchase both a farm-level crop insurance policy and a supplemental county-level crop insurance policy. This study evaluates this proposal for representative cotton farms in Georgia. The goal is to test whether the additional risk protection provided by the supplemental policy is considered to be worth the additional cost.certainty peril crop insurance, Risk and Uncertainty,

Victor Melgar's Coffee Farm

This case study focuses on a coffee farmer in Guatemala who, given current low coffee prices, is worried about his ability to maintain the family tradition of coffee production. He wonders whether the current low prices are just another of the periodic downturns in the volatile coffee market or whether the market is experiencing structural changes that will have long-term implications. In this case, the farmer is presented with three alternatives, including continuing to produce and market commodity coffee. The other alternatives involve changes in production and/or marketing practices intended to increase profit margins.Crop Production/Industries,

GLOBALIZATION, TECHNOLOGICAL ADVANCES, AND OTHER THREATS TO AMERICAN AGRICULTURE: DISCUSSION

International Relations/Trade,

INVESTIGATING THE IMPLICATIONS OF MULTI-CROP REVENUE INSURANCE FOR PRODUCER RISK MANAGEMENT

This study investigates the potential for alternative multi-crop revenue insurance designs in comparison to single crop yield and revenue insurance designs. A non-parametric multi-crop insurance model is developed which subsumes the single crop designs. The results compare alternative designs in terms of rate levels and risk reduction gains for representative Mississippi producers.crop insurance, revenue insurance, risk, Risk and Uncertainty,

Customizable Area Whole Farm Insurance (CAWFI)

The customizable area whole farm insurance (CAWFI) was designed and compared with no insurance program and currently available whole farm insurance based on farm level yield (CFWFI). The CAWFI yields higher certainty equivalents over no insurance program, but lower to CFWFI; CAWFI has fairly small indemnity compared with CFWFI.Agricultural and Food Policy, Crop Production/Industries, Production Economics, Risk and Uncertainty,

TESTING THE VIABILITY OF AREA YIELD INSURANCE FOR COTTON AND SOYBEANS IN THE SOUTHEAST

GRP is essentially a put option on the NASS estimate of the county average yield. Purchasers of GRP are exposed to geographic basis risk. This study uses farm- and county-level yield data to examine the viability of area yield insurance for cotton and soybean farms in the southeastern U.S.Risk and Uncertainty,