Suchergebnisse

AbstractCatastrophic or systemic risks are a major challenge for the farm and food system and rural communities. Private sector markets for sharing catastrophic risks are limited, but less so than in the past. This article presents a conceptual base for understanding why markets for sharing catastrophic risks may be incomplete and/or inefficient. Next, federal efforts to address catastrophic risk losses are reviewed. Finally, new capital market developments are presented and an alternative is introduced where the government would write risk options for specific perils.

AbstractThe Stacked Income Protection Plan (STAX) county‐level insurance product is analyzed for cotton producers in Texas. In contrast to studies based on representative farms, this analysis uses actual farm‐level yield data, which allows one to observe the heterogeneity of STAX effectiveness across farms in a county. The findings indicate that, for most farms, STAX is not a very effective alternative to farm‐level crop insurance. However, contrary to observed behavior, the findings suggest that many cotton producers in Texas would benefit from using STAX as a complement to their farm‐level crop insurance.

AbstractThe USDA produces yield and supply estimates for many crops that influence commodity markets and are used for implementing the Title I program, Agriculture Risk Coverage. Precision agriculture advances have increased the potential for the private sector to capture near‐real time yield data, however, it is unclear whether they provide advantages in setting market positions since the samples are typically non‐random. Here, we use yield histories from a large population of corn farms to quantify biases associated with different non‐random sampling schemes for estimating aggregate yield, and demonstrate the effectiveness of benchmarking procedures for removing systematic prediction error.

AbstractA multi‐year drought has taken a severe toll on the agricultural economy of California's Central Valley. Index insurance is an instrument with the potential to protect water users from economic losses due to periodic water shortages. An index insurance product based on the Sacramento Index and adapted to the Central Valley Project water supply is proposed. To address the potential for intertemporal adverse selection, three product designs are suggested: (1) "early bird" insurance; (2) variable premium insurance; and (3) variable deductible insurance. The performance of the designs are assessed using loss functions from the Westlands Water District in the San Joaquin Valley.