Reduction of Yield and Income Risk Under Alternative Crop Insurance and Disaster Assistance Plans
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This study compares the effectiveness of five crop insurance/disaster
assistance plans: an individual farm yield insurance plan similar to the
current FCIC multi-peril program ; two area yield insurance plans; a farm yield
disaster assistance plan; and an area yield disaster assistance plan. These
methods are examined for reduction in yield and gross income variability with
and without participation in the government deficiency payment programs using
farm-level yield data from 98 dryland wheat farms and 38 dryland corn farms in
Kansas . Although individual farm yield insurance is complex, suffers from
moral hazard and adverse selection problems, and is likely to be the most
expensive to administer , it provides more yield and gross income risk
reduction than any of the alternative insurance/disaster assistance plans.