Scholarship & Research
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Item The Impacts of the Canadian Wheat Board Ruling on the North American Malt Barley Markets(2014-07) Bekkerman, Anton; Schweizer, Heidi; Smith, Vincent H.The 2011 Marketing Freedom for Grain Farmers Act deregulated Canadian grain markets and removed the Canadian Wheat Board (CWB) as the sole buyer and seller of Canadian grain. We develop a rational expectations contract decision model that serves as the basis for an empirically informed simulation analysis of malt barley contracting opportunities between Canadian farmers and U.S. maltsters in the deregulated environment. Comparative statics and simulation results indicate that some new opportunities for contracting are possible, but the likelihood of favorable conditions for U.S. maltsters to contract with Canadian rather than U.S. farmers is low—between 9% and 35% over a range of possible selection rates. The effects on contracting of the termination of the Canadian grain transportation revenue cap policy and of the relaxation of criteria for the release of new spring wheat varieties are also investigated. While changes to grain transportation policies are not likely to significantly affect favorable conditions for contracting, reducing constraints on Canadian farmers’ access to higher yielding wheat varieties could increase the returns from growing spring wheat but decrease the likelihood of contracting for malt barley with U.S. maltsters by an average of 5.3 percentage points.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.