Risk Reduction Under An Area Yield-Based Crop Insurance Plan for Southcentral Kansas Winter Wheat

Carriker, Gordon L.; Williams, Jeffery R.; Barnaby, Glenn Arthur, Jr.; Black, J. Roy

Risk Reduction Under An Area Yield-Based Crop Insurance Plan for Southcentral Kansas Winter Wheat

Autores

Carriker, Gordon L.

Williams, Jeffery R.

Barnaby, Glenn Arthur, Jr.

Black, J. Roy

Descripción

This study compares the effectiveness of two crop insurance plans: an individual farm-yield measurement similar to the current Federal Crop Insurance Corporation multi-peril program and an area-yield measurement method. These methods are examined for reduction in yield and gross farm income variability, including deficiency payments, using farm-level wheat yield data from 100 southcentra1 Kansas farms. Although an individual farm-level measurement plan is complex and suffers from moral hazard and adverse selection problems, it provides more gross farm income risk reduction than an area plan.