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Estimating Crop Yield Insurance Premium Rates

Published online by Cambridge University Press:  10 May 2017

Daniel J. Dudek  and
P. Geoffrey Allen
Daniel J. Dudek
Affiliation:
Department of Agricultural and Resource Economics, University of Massachusetts, Amherst
P. Geoffrey Allen
Affiliation:
Department of Agricultural and Resource Economics, University of Massachusetts, Amherst
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Abstract

Insurance rates for crop yield protection programs have traditionally been calculated from county average yields. Where grower acreages and yields are not homogeneous, this approach leads to higher premiums and payouts and greater incidence of adverse selection. With individual grower data a production weighted rate premium calculation method can be used which avoids these problems. Furthermore, the definition of rate classes is not constrained to county boundaries. The additional complication of technical change is addressed and one solution is provided. Results are presented for the cranberry industry.

Type
Articles
Information
Journal of the Northeastern Agricultural Economics Council , Volume 13 , Issue 1 , April 1984 , pp. 119 - 127
Copyright
Copyright © Northeastern Agricultural and Resource Economics Association 

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Footnotes

The research reported in this paper was supported by both the Farm Management Branch, Extension Service and by the Federal Crop Insurance Corporation of USDA. We also wish to acknowledge the contributions of Bernard J. Morzuch and the anonymous reviewers. Computational assistance was provided by John Coyle and Christy Dudek. As usual, the authors are solely responsible for any errors or omissions.

References

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