Publications by Colleges and Departments (MSU - Bozeman)
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Item Evaluation of Crop Insurance Yield Guarantees and Producer Welfare with Upward Trending Yields(2012-12) Adhikari, Subodh; Knight, T. O.; Belasco, Eric J.Actual Production History (APH) yields play a critical role in determining the coverage offered to producers by the Risk Management Agency’s yield-based crop insurance products. Using both county and individual insured unit data, we examine the impact of APH yield trends for Texas cotton and Illinois corn. Our findings indicate that biases due to using simple average APH yields when yields are trending upward reduce the expected indemnity and actuarially fair premium rate. The estimated welfare effect also varies significantly with different commonly used detrending approaches. This study demonstrates that producer welfare can be enhanced through proper treatment of yield trends in crop insurance programs.Item Yield Guarantee Determination and the Producer Welfare Benefits of Crop Insurance(2013) Adhikari, Subodh; Knight, T. O.; Belasco, Eric J.Farm-level crop insurance guarantees are based on a small sample of historical yields. Two measures enacted by Congress, yield substitution and yield floors, are intended to mitigate the erratic nature of small samples in determining yield guarantees. We examine the impact of small samples and related policy provisions on the producer welfare benefits of individual-level yield insurance. Our findings indicate that sampling variability in Actual Production History (APH) yields has the potential to reduce producer welfare and that the magnitude of this effect differs substantially across crops. The yield substitution and yield floor provisions mitigate the negative impact of sampling error but also bias guarantees upward, increasing government cost of the insurance programs.Item High Tunnels Are My Crop Insurance: An Assessment of Risk Management Tools for Small-Scale Specialty Crop Producers(2013-08) Belasco, Eric J.; Miles, C.; Wszelaki, Annette L.; Ponnaluru, S.; Galinato, S.; March, T.High tunnels are being used by specialty crop producers to enhance production yields and quality, extend growing seasons, and protect crops from extreme weather. The tunnels are unheated, plastic-covered structures under which crops are planted directly in the soil, and they provide greater environmental protection and control than open-field production. This study uses field-level experiments to evaluate high-tunnel production. The results suggest that investments in high tunnels can provide increased profits and superior protection against adverse risks relative to crop insurance.