The crop insurance demand response to premium subsidies: Evidence from U.S. Agriculture

Tsiboe, Francis; Turner, Dylan

doi:10.1016/j.foodpol.2023.102505

Food Policy

2023

DOI: 10.1016/j.foodpol.2023.102505

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The crop insurance demand response to premium subsidies: Evidence from U.S. Agriculture

Francis Tsiboe

Dylan Turner

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Cited by 14 publications

References 44 publications

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Actuarial implications of prevented planting coverage

Turner,

Tsiboe,

Biram

et al. 2024

Applied Eco Perspectives Pol

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Within the Federal Crop Insurance Program (FCIP), prevented planting (PP) coverage provides payments for pre‐planting costs associated with crops that ultimately cannot be planted due to adverse weather. PP indemnities, which are not considered production losses within the FCIP rating methodology, influence premium rates differently than typical losses. This study utilizes a panel data set consisting of approximately 77,697 county level observations from RMA's summary of business to identify the relationship between the prevalence of prevent plant use and a number of actuarial related outcomes. Overall, we find that increases in the share of total indemnities attributable to PP claims over the preceding 10 years produce generally negligible changes to loss ratios, but can significantly increase loss ratios among subsets of the FCIP that heavily utilize PP coverage (greater than 20% of total indemnities). This suggests that, despite loss ratios being robust to typical rates of PP claims, actuarial performance can degrade when PP payments are high relative to indemnities from all other perils. Additionally, a simulation is conducted in which prevent plant indemnities are counterfactually treated as production losses when pricing FCIP contracts as opposed to current practice of recovering prevent plant costs via a fixed rate load. Doing so suggests significant improvements in loss ratios for crops that have historically had high shares of prevent plant indemnities, however, these improvements come at the expense of higher premiums and reduced demand for crop insurance.

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Actuarial implications of prevented planting coverage

Turner,

Tsiboe,

Biram

et al. 2024

Applied Eco Perspectives Pol

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Does crop insurance ensure food security for Indian farmers? Evidence from a nationally representative survey

Akber,

Paltasingh,

Mishra

2023

Agribusiness

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This study examines the impact of farm households' decision to adopt crop insurance and its effect on food security. Using the National Sample Survey Office's 77th round of data (2019–2020) from Indian farming households, the endogenous switching regression results confirm that insuring crops against production risks increases food security (as measured by higher consumption expenditures and net farm income). Specifically, findings show that farming households would decrease consumption expenditures by 15% and net farm income by 26% if they had not adopted crop insurance. Similarly, the noninsured families would have 23% higher consumption expenditures and 31% higher net farm income if they had insured crops. However, we find heterogeneity in welfare impacts because large farmers reap more benefits than smallholders. Policy implications from this study call for increased awareness of insurance programs, educating farmers about crop insurance schemes, and an effective institutional framework to reduce heterogeneity in insurance benefits. [EconLit Citations: Q13, Q18, O53].

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Farm‐level evaluation of area‐ and agroclimatic‐based index insurance

Tsiboe,

Tack,

2023

J of Agr & App Econ Assoc

Self Cite

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We utilize over 190,000 historical farm‐level dryland row‐crop yield observations (corn, sorghum, soybeans, and winter wheat) spanning over 7000 Kansas farms from 1973 to 2018 coupled with agroclimatic variables to assess the performance of a broad range of weather‐ and area‐based insurance products. Results showed substantial levels of basis risk across agroclimatic‐based indices, limited ability to reduce income variability under fair pricing, and underperformance relative to area‐based yield products. Growth‐stage specific heat indices for corn and soybeans may offer an effective risk management tool. Implications in the context of current agricultural policy initiatives and climate change adaptation are discussed.

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The crop insurance demand response to premium subsidies: Evidence from U.S. Agriculture

Cited by 14 publications

References 44 publications

Actuarial implications of prevented planting coverage

Actuarial implications of prevented planting coverage

Does crop insurance ensure food security for Indian farmers? Evidence from a nationally representative survey

Farm‐level evaluation of area‐ and agroclimatic‐based index insurance

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