Theses and Dissertations at Montana State University (MSU)
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Item The impact of farm-level variables on federal crop insurance coverage level selection(Montana State University - Bozeman, College of Agriculture, 2019) Boyd, Mark Weiderspon; Chairperson, Graduate Committee: Eric BelascoThis thesis evaluates the significance of farm-level variables related to cash flow on coverage level selections as a potential explanation for the well-documented behavioral anomaly in producers' federal crop insurance coverage level selection choices. The current crop insurance literature appears to lack a clear explanation of why producers choose to insure at lower or less than economically optimal coverage levels. To inform this question, the relationship between liquidity factors and insurance coverage level selection are estimated empirically using linear and fixed effects models with data from the Agricultural Resource Management Survey, Risk Management Agency Summary of Business, and the Risk Management Agency Actuarial Data Master. Specifically, this research endeavors to evaluate the associations between variables related to cash flow and coverage level selection, as well as isolate the effect of premium rates on coverage selection, in order to provide evidence that constrained cash flow may be the reason for the appearance of nonutility maximization in coverage level selection. The results indicate that variables directly related to cash flow such as higher costs are associated with significant differences in coverage level selection, though the direction of the association is dependent on the type of costs, whether fixed or variable, while higher revenue higher acreage farms insure at higher coverage levels. In addition, higher premium costs are associated with lower coverage level selection, despite subsidy incentives indicating expected cash flow plays a significant role in coverage level decisions.Item Impacts of copula modeling and parametric variation on revenue policy premium rates in multiple peril crop insurance(Montana State University - Bozeman, College of Agriculture, 2015) Simonds, Seth Neil; Chairperson, Graduate Committee: Vincent H. Smith; Joseph Atwood (co-chair)Federally subsidized multiple peril crop insurance is the primary mechanism by which U.S. farmers receive public income. This study investigates the role of copula modeling in developing revenue product premium rates for multiple peril crop insurance. Simulation and empirical experiments are used to examine the viability of a ratemaking practice that relies on an assumed Normal copula. This study shows that the assumption of a copula cannot be statistically justified and that premium rates generated within copulas and between alternative copulas can diverge as a function of the marginal price and yield distributions, their relationship and the level of protection a producer elects. The current ratemaking practice does not account for the imprecision of premium rates implicit to a copula based approach. A copula selection method is proposed and examined in order to reduce premium rate imprecision resulting from copula misspecification. A non-copula based ratemaking method may better meet the overt policy objectives of multiple peril crop insurance.Item Agricultural implications of weather control(Montana State University - Bozeman, College of Agriculture, 1954) Pavelis, George A.Item Farmers attitudes toward and evaluation and use of insurance for income protection on Montana wheat farms(Montana State University - Bozeman, College of Agriculture, 1960) Rodewald, Gordon E.Item Improving the effectiveness and acceptability of the Federal crop insurance program(Montana State University - Bozeman, College of Agriculture, 1965) Myrick, Dana H.Item A preliminary analysis of factors affecting crop yields on irrigated land with special reference to Greenfields division, Sun river project(Montana State University - Bozeman, College of Agriculture, 1937) Bower, John C.Item The effects of optional units on crop insurance indemnity payments(Montana State University - Bozeman, College of Agriculture, 2002) Kuhling, John; Chairperson, Graduate Committee: Myles Watts; Joseph Atwood (co-chair)The federal government supports numerous agricultural programs including Multiple Peril Crop Insurance (MPCI). Currently, the Risk Management Agency of the United States Department of Agriculture is legally required to determine actuarially sound premiums for MPCI. A variety of producer and production characteristics affect expected MPCI indemnity payments and thereby actuarially sound premiums. Qualifying producers may choose to split their cropland into "optional units." For the purposes of calculating crop insurance indemnity payments, the Risk Management Agency considers each optional unit a separate insurance contract. This thesis investigates whether the number of optional units a farmer is eligible to insure affects expected per acre indemnity payments. Using regression analysis and Monte Carlo simulations, this thesis statistically tests whether the number of optional units insured, separately or consolidated into a single parcel, affects expected indemnities per acre. The predictions are that the number of optional units insured separately does not affect expected indemnities per acre and that the number of optional units consolidated into a single parcel does affect expected per acre indemnities. This thesis finds a per acre premium decrease for farmers who insure available optional units as a single parcel and that the decrease in the premium be positively related to the number of optional units consolidated. In addition, this thesis finds the RMA's practice of increasing per acre premiums for farmers who separately insure two or more optional units versus the premium per acre for farmers who insure a single optional unit.Item The effects of adverse selection and effective coverage levels on crop insurance participation(Montana State University - Bozeman, College of Agriculture, 1999) Anderson, Ian T.; Chairperson, Graduate Committee: Myles Watts.The effects of crop insurance premium levels (adverse selection) and insurance coverage levels (effective coverage) on crop insurance participation are examined. A simulation of premium rates, coverage levels, and participation rates over time models the implications of random yield fluctuations using farm and county level data from Chouteau County, Montana, wheat producers. A statistical analysis measuring participation as a function of expected indemnity payments, effective coverage levels, and premium rates is conducted using cotton regional level data from the majority of the cotton producing states using a weighted ordinary least squares regression. The simulation shows that as rates increase (decrease) and coverage levels decrease (increase), participation levels decrease (increase). It also demonstrates that by indexing producers' insurable yields, participation rates stabilize. The regression results yield a significant, positive coefficient for the expected indemnity variable. However, contrary to expectations, the coefficient for effective coverage is insignificant and negative. The premium rate coefficient is insignificant and negative.Item Why do households cultivate landraces? : Wheat variety selection and in situ conservation in Turkey(Montana State University - Bozeman, College of Agriculture, 2006) Kruzich, Tyler Joseph; Chairperson, Graduate Committee: Wendy Stock.Socioeconomic/household characteristics, agroecological heterogeneity, market access, and variety characteristics are used to empirically explain why households continue to cultivate traditional varieties of wheat in Turkey even though higher-yielding modern varieties exist. These determinants are then used to examine on-farm diversity outcomes and how the availability of modern varieties is affecting the in situ conservation of crop genetic resources from landraces. Socioeconomic/household characteristics, agroecological heterogeneity, and market access are all found to jointly influence households' decisions to cultivate landraces and to affect on-farm diversity outcomes. Empirical estimation shows that variety characteristics do not jointly affect the probability that households plant landraces, nor do they affect on-farm diversity levels. Policy recommendations and ideas for future research are provided.Item Reduction of yield variance through crop insurance(Montana State University - Bozeman, College of Agriculture, 1994) Chouinard, Hayley Helene; Chairperson, Graduate Committee: Vincent H. Smith.The variance of a producer's yield provides uncertainty and may be considered the risk a producer faces. crop insurance may provide protection against yield variability. If yields are necessarily low, an insured producer may receive an indemnity payment. Currently, crop insurance is based on each individual's yield. If the individual's yield falls below a specified level, the individual will receive an indemnity. An alternative crop insurance program bases indemnities on . an area yield. If the yield of the predetermined area falls below a specific level, all insured producers will receive an indemnity. This thesis examines the yield variability reduction received by purchasing various forms of area yield and individual yield crop insurance and the actuarially fair premium costs associated with them. When a producer purchases insurance two decisions are made. First, the producer selects a trigger level which determines the critical yield which generates an indemnity payment. Second, the producer may be able to select a coverage level which is the amount of acreage covered by the contract. Each contract examined allows different levels for the trigger and coverage levels. The variance reduction provided from each contract is the variance of the yield without insurance less the variance of the yield with an insurance contract. The results indicate most producers receive some variance reduction from the area yield contracts. And, producers who have yields which are closely correlated with the area yield receive more variance reduction from the area yield insurance than from the individual yield insurance contracts. However, the area yield contracts which provide on average more yield variance reduction than the individual yield contracts, also have much higher actuarially fair premium costs. The area yield insurance contracts should be considered as an alternative to individual yield insurance, but the premium costs must be evaluated also.