Reform (FAIR) Act implemented farm program contract payments that do not increase as agricultural prices fall, shifting farm policy toward a greater emphasis on risk management and, in particular, on crop insurance. This shift has resulted in the introduction of new types of insurance policies; especially those that provide both yield and price protection. Several new and innovative crop polici...

Risk theory tells us if an insurer can effectively pool a large number of individuals to reduce the total risk, he then can provide the insurance by charging a premium close to the actuarially fair rate. There is, however, a common belief that the risk can be effectively pooled only when the random loss is independent, so that crop insurance markets cannot survive without government subsidy bec...

When the indemnity schedule is contingent on the farmer’s price and individual yield, an optimal crop revenue insurance contract depends only on the farmer’s gross revenue. However, this design is not efficient if, as is the case with available contracts, the coverage function is based on imperfect estimators of individual yield and/or price. The producer’s degree of prudence and the extent of ...

An objective drought index that measures the dry and hot conditions adversely affecting crop yields is used in a regression analysis to test whether corn and soybeans have become more drought tolerant. Results indicate that corn yield losses from a drought of a given severity, whether measured in quantity terms or as a percentage of mean yield, have decreased over time. The null hypothesis that...

Risk theory tells us if an insurer can effectively pool a large number of individuals to reduce the total risk, he then can provide the insurance by charging a premium close to the actuarially fair rate. There is, however, a common belief that the risk can be effectively pooled only when the random loss is independent, so that crop insurance markets cannot survive without government subsidy bec...

Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. ABSTRACT This article examines the extent to which actual crop insurance indemnification behavior conforms to the theoretical predictions of two ex post moral hazard models – costly state verification and costly state falsification. A nonpar...

The purpose of this paper is to assess the gaps in the adoption of crop insurance in Thailand and suggest possible solutions relating to policy support and framework, implementation mechanisms, technology adoption, and awareness amongst farmers. The methodology includes a literature review, interaction with officials, rice experts and insurance experts, and discussion with farmers. A study was ...