Author: Sunjae WonPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
Three Essays on the Agriculture Production Risk Management
Author: Sunjae WonThree Essays on Agricultural Risk and Insurance
Author: Li ZhangThree Essays on Risk and Uncertainty in Agriculture
Author: Nicholas D. PaulsonThree Essays on Risk and Uncertainty in Agriculture
Author: Nicholas David PaulsonPublisher:
ISBN:
Category :
Languages : en
Pages : 131
Book Description
The general theme of this dissertation is risk and uncertainty in agriculture, with each chapter addressing a specific topic related to agricultural risk and uncertainty. Chapter 2 examines the effects of production uncertainty on the types of contract structures used in specialty grain markets. A theoretical model of a contractual relationship between a monopsonistic processor and risk-neutral producers is presented. Two common contract structures, and their resulting effects on the sharing of production risk between buyer and seller, are compared. The spatial structure of yields and farm-level yield volatility are shown to have significant impacts on the processor's preferred choice of contract structure and expected profits of both the processor and farmers in the resulting equilibrium. Chapter 3 provides a critical look at a classic definition regarding the relationship between input use and risk, and attempts to reconcile an apparent paradox in the production literature. Experimental corn yield response data is used to estimate a stochastic production relationship between applied fertilizer, soil nutrient availability, and corn output. Optimal fertilizer application rates for risk-averse and risk-neutral producers are found using numerical methods. In addition to the empirical analysis, primary data collected through a farmer survey instrument, designed to elicit information from farmers regarding their risk attitudes and subjective beliefs regarding the relationship between risk and fertilizer use, is presented and compared with the results of the empirical analysis. Chapter 4 turns to the opportunities for managing weather risk using weather derivative markets. Developing regions are areas in which weather based risk management tools show significant potential. However, the success and long-term viability of insurance programs depends heavily on the availability of accurate and reliable historical data. The lack of this type of historical data for developing regions is one of the largest obstacles to insurance program development in these regions. A framework which utilizes statistical methods to estimate unbiased rainfall histories from sparse data is developed. To validate the methodology's usefulness, a drought insurance example is presented using a rich data set of historical rainfall at weather stations across the state of Iowa.
Three Essays on Agricultural Risk, Insurance and Technology
Author: Ligia Vado SequeiraA Comprehensive Assessment of the Role of Risk in U.S. Agriculture
Author: Richard E. JustPublisher: Springer Science & Business Media
ISBN: 9780792375678
Category : Business & Economics
Languages : en
Pages : 608
Book Description
After all the research on agricultural risk to date, the treatment of risk in agricultural research is far from harmonious. Many competing risk models have been proposed. Some new methodologies are largely untested. Some of the leading empirical methodologies in agricultural economic research are poorly suited for problems with aggregate data where risk averse behavior is less likely to be important. This book is intended to (i) define the current state of the literature on agricultural risk research, (ii) provide a critical evaluation of economic risk research on agriculture to date and (iii) set a research agenda that will meet future needs and prospects. This type of research promises to become of increasing importance because agricultural policy in the United States and elsewhere has decidedly shifted from explicit income support objectives to risk-related motivations of helping farmers deal with risk. Beginning with the 1996 Farm Bill, the primary set of policy instruments from U.S. agriculture has shifted from target prices and set aside acreage to agricultural crop insurance. Because this book is intended to have specific implications for U.S. agricultural policy, it has a decidedly domestic scope, but clearly many of the issues have application abroad. For each of the papers and topics included in this volume, individuals have been selected to give the strongest and broadest possible treatment of each facet of the problem. The result is this comprehensive reference book on the economics of agricultural risk.
Effects of Federal Risk Management Programs on Investment, Production, and Contract Design Under Uncertainty
Author: Sangtaek SeoPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Agricultural producers face uncertain agricultural production and market conditions. Much of the uncertainty faced by agricultural producers cannot be controlled by the producer, but can be managed. Several risk management programs are available in the U.S. to help manage uncertainties in agricultural production, marketing, and finance. This study focuses on the farm level economic implications of the federal risk management programs. In particular, the effects of the federal risk management programs on investment, production, and contract design are investigated. The dissertation is comprised of three essays. The unifying theme of these essays is the economic analysis of crop insurance programs. The first essay examines the effects of revenue insurance on the entry and exit thresholds of table grape producers using a real option approach. The results show that revenue insurance decreases the entry and exit thresholds compared with no revenue insurance, thus increasing the investment and current farming operation. If the policy goal is to induce more farmers in grape farming, the insurance policy with a high coverage level and high subsidy rate is effective. In the second essay, a mathematical programming model is used to examine the effects of federal risk management programs on optimal nitrogen fertilizer use and land allocation simultaneously. Current insurance programs and the Marketing Loan Program increase the optimal fertilizer rate 2% and increase the optimal cotton acreage119-130% in a Texas cotton-sorghum system. Assuming nitrogen is harmful to the environment and cotton requires higher nitrogen use, these risk management programs counteract federal environmental programs. The third essay uses a principal-agent model to examine the optimal contract design that induces the best effort from the farmer when crop insurance is purchased. With the introduction of crop insurance, the investor's optimal equity financing contract requires that the farmer bear more risk in order to have the incentive to work hard, which is achieved by increasing variable compensation and decreasing fixed compensation.
Managing Risk in Farming
Author: Publisher:
ISBN:
Category : Agricultural diversification
Languages : en
Pages : 136
Book Description
Essays in the Economics of Risk Management
Author: Huang ChenPublisher:
ISBN: 9780438629554
Category :
Languages : en
Pages :
Book Description
This dissertation is motivated by two important policy changes in China's agricultural sector. First, the market-oriented land reform policies, such as strengthening individual property rights, are expected to raise productivity through multiple mechanisms including increased investment demand and land consolidation, which would take advantage of scale economies. Second, the subsidization and promotion of agricultural insurance are expected to increase agricultural investment by stabilizing farmers' income and expanding credit supply. In this dissertation, I explore a range of theoretical and empirical questions through the lens of the economics of risk to understand the potential impacts of the policies and generate insights for future policy design. The first study, "Agricultural Risk, Insurance, and the Inverse Relationship between Farm Size and Productivity", examines the potential for unintended adverse impacts of land consolidation on farm productivity and evaluates the degree to which insurance can mitigate the adverse impacts. Land consolidation may lower productivity and output if, as found commonly in the literature, an inverse relationship exists between farm-size and yield. I first develop a farm-household model that identifies an "Income Share Effect" (ISE), which provides a new risk-based explanation rooted in the Chinese context for the inverse relationship. In China, the prevalence of very small plots implies that most farm households have surplus labor and dedicate significant time to non-farm activities. As land size increases, farmers shift labor away from low-risk, off-farm activities and devote more time to risky farming. Land consolidation and the creation of a class of commercial family farms thus increases the share of household income at risk and leads larger farmers to behave more conservatively in their farming decisions. In the absence of insurance markets, the land reform policies may thus achieve the goal of land consolidation but at a cost of lower productivity. I then show that the introduction of perfect crop insurance offsets the inverse relationship as larger farmers are able to protect their specialized agricultural portfolio. I empirically test for the existence of the inverse relationship in the absence of insurance. I find that a 1 mu increase in farm size causes a 1.6 yuan/mu decrease in the value of yields. This implies that if average land size increases from the sample mean in 2013, which is 67mu/farm, to 100mu/farm in China, total production would decrease by 3%, a considerable magnitude when talking about national food supply. Finally, I show that the availability of crop insurance has a significant positive impact on productivity, allowing farmers to “recover” the productivity lost due to the inverse relationship. Because of the limitations of conventional agricultural insurance, China's government is considering promoting an index insurance market. However, based on experiences from other countries, low take-up rates could be an obstacle in developing this market. I investigate the issue of demand for index insurance in Chapter 3: "Theoretical Explanations of Low Take-up Rates of Weather Index Insurance". I use an expected-utility framework to explore the role of three determinants of insurance demand: subjective beliefs about weather risk, index quality as measured by basis risk (the risk of contractual non-performance) and, farmer heterogeneity in vulnerability to weather risk. The model clarifies how combinations of contract quality and farmer vulnerability map into welfare gains for and insurance demand by farmers. I then use 52 years of China's agricultural production and weather data to simulate demand and welfare impacts of the introduction of an index insurance market in 26 provinces.
Managing Risk in Agriculture
Author: Ashok K. MishraPublisher: CABI
ISBN: 1800622260
Category : Business & Economics
Languages : en
Pages : 339
Book Description
The book addresses and documents farmers' risks in developing and emerging economies. It draws lessons from experimental economics on measuring risk preferences, attitudes, gender differences in managing risks, and risk management strategies in countries across Africa and Asia. It argues policy makers, especially in emerging economies, need a better understanding of farmers' attitudes toward risk and choices of risk management strategies when designing policies to support production agriculture. The book includes chapters on three themes: understanding risk attitudes and preferences; using experimental economics to measure risk, preferences, and risk management strategies; and understanding climate change, risk, and risk management. The book critically examines the currently held beliefs about risk preference, attitudes, and empirical estimation of risk management strategies, emphasizing developing and emerging economies (DEE). This book is ideal for students and researchers in universities and research organizations who conduct applied research on public policy, community development, and rural development, and will also be of interest to policy-makers in those fields.