Agricultural Insurance in Developed Countries: Where Have We Been and Where Are We Going?

Smith, Vincent H.; Glauber, Joseph W.

doi:10.1093/aepp/pps029

Cited by 148 publications

(103 citation statements)

References 38 publications

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“…In particular, crop insurance schemes may be launched to cover farmers against losses from drought, pest attacks, hailstorms, thunderstorms, heavy rains, and other natural hazards, with the payment of small premiums in addition to credit markup [35]. Based on the abovementioned empirical evidence, we have reason to believe that differential access to credit plays an important role in explaining observed differences in fixed input use in developing countries.…”

Section: Impacts Of Land Tenure On Agricultural Investmentmentioning

confidence: 99%

Land Rental Market Participation and Its Impact on Fixed Investment and Household Welfare: Evidence from Chinese Apple Production Sites

2017

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Abstract:Using a large dataset from the specialized apple production sites of China and multiple econometric methods, we identify the main determinants of farmers' land rental decisions and the effects from renting land in on their investment and economic welfare. It is found that having more effective cultivated land before renting in has a significantly negative effect on the land rented in, that households with rich land endowments or large areas of land rented in usually invest more in fixed assets, and that efficient provisions of credit and insurance are helpful to encourage investments in fixed assets. As a result, renting in land generates gains in terms of agricultural income, total income, and productive expenditure.

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Section: Impacts Of Land Tenure On Agricultural Investmentmentioning

confidence: 99%

Land Rental Market Participation and Its Impact on Fixed Investment and Household Welfare: Evidence from Chinese Apple Production Sites

2017

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“…If an index fails to provide indemnities when the farm experiences losses, farmers would pay less for this insurance (Smith and Glauber, 2012). Satellite-based information is still a recent development that has not yet proved itself (McLaurin and Turvey, 2011;Leblois and Quirion, 2013).…”

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confidence: 99%

Self-insurance and multi-peril grassland crop insurance: the case of French suckler cow farms

Mosnier

2015

Agricultural Finance Review

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Purpose -From the perspectives of the probable replacement of the national calamity funds by multi-peril grassland insurance, the purpose of this paper is to estimate demand for grassland production insurance. Design/methodology/approach -A discrete stochastic programming model with a three-year planning horizon was used to run simulations for farms raising suckler cows primarily with grasslands. In this model, the annual area insured and some production decisions are optimized under grasland yield uncertainty, with possible ex post production-system adjustments. The effects of insurance loading cost (14 levels), insurance coverage level (three levels), risk aversion (two levels) and stock levels (forage and animal stocks vary according to grassland yields and to farm management of the previous years) were analyzed. Findings -The results show that grassland insurance could be used as a flexible risk management tool, when farm becomes vulnerable to fodder shortfall. According to previous years' grassland yields and to the subsequent states of hay stock and animal liveweight, the area insured could vary between nearly the none and full. Farmers with low-average stocking rate and important hay storage capacity have less incentive to buy grassland insurance. The author also demonstrates that for a given loading cost, more insurance is purchased at a coverage level of 70 percent of average yield than at higher coverage levels. The cost of self-insurance increases for important and rare losses while multi-peril grassland insurance premium decreases. Higher levels of risk aversion also raise the quantity of insurance subscribed. Eventually, insurance price is a key factor. Almost no insurance is bought for loading costs greater than 1.1 under low-risk aversion and for loading costs greater than 1.3 under moderate risk aversion. Research limitations/implications -The willingness to pay for insurance could have been overestimated for different reasons. First, basis risks have not been introduced in the simulation framework. Although the Forage Production Index performed quite well, basis risks are high enough to trigger inappropriate indemnifications in some cases. Consequences of these risks should be estimated in further research. Second, other self-insurance options and public emergency measures such as subsidized loan or reduction in social security contributions should also be considered to assess and reduce farmers vulnerability to risks. Practical implications -The launching of the multi-peril grassland insurance is likely to be successful thanks to the 65 percent of public subsidies on insurance premiuml. However, considering that the loading cost is likely to be high and that demand for grassland production insurance is rather low, multi-peril grassland production insurance may struggle to continue unsubsidized. Originality/value -This paper provides a framework that enables to estimate demand for grassland production insurance factoring in substitution with self-insurance and taking into account success...

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“…The agricultural insurance system covers three major risks to production issues, price shocks, and catastrophe. China's current system can effectively manage catastrophic events and production issues, but is ill equipped to manage threats to prices [8]. Knowing this, we can turn to see what other countries have done with their insurance systems.…”

Section: Transforming the Government Subsidies And Macroscopic Contromentioning

confidence: 99%

Using Financial Control to Answer Dilemma in Chinese Corn Market

Yu¹,

Zhang²,

Yu³

2017

dtssehs

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Abstract. There are two large issues looming over the Chinese market for corn; low profit margins and market fluctuation. Analysis of the industrial market allow us to see that the rising costs and excess of supply create a problem that makes the future of the Chinese corn market look bleak. While national policy supports subsidies of the production costs, it does not show any sort of alleviation of the market crisis. The Chinese government ought to use the powers of big data and internet of things to increase the effectiveness of subsidies by transitioning into insurance compensation for farmers. Financial controls like futures and stock should be used to protect against market fluctuations.

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Agricultural Insurance in Developed Countries: Where Have We Been and Where Are We Going?

Cited by 148 publications

References 38 publications

Land Rental Market Participation and Its Impact on Fixed Investment and Household Welfare: Evidence from Chinese Apple Production Sites

Land Rental Market Participation and Its Impact on Fixed Investment and Household Welfare: Evidence from Chinese Apple Production Sites

Self-insurance and multi-peril grassland crop insurance: the case of French suckler cow farms

Using Financial Control to Answer Dilemma in Chinese Corn Market

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