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An assessment of risk management strategies for grain growers in the Pacific Northwest

An assessment of risk management strategies for grain growers in the Pacific Northwest Due to the low crop insurance participation by grain growers in the Pacific Northwest, the performance of insurance programs and the futures market is assessed in this area. Revenue insurance, combined with the futures and government programs, is identified as the optimal risk management portfolio. Although yield risk level, decision makers risk preference, and actuarial fairness of premiums can all affect farmers choices, the current subsidy policy is most influential. The varying subsidy levels induce farmers subsidyseeking incentive and suppress the riskreducing incentive. There is little diversification effect from growing two crops in the rotation instead of one. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Agricultural Finance Review Emerald Publishing

An assessment of risk management strategies for grain growers in the Pacific Northwest

Agricultural Finance Review , Volume 62 (2): 17 – Nov 1, 2002

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0002-1466
DOI
10.1108/00214920280001133
Publisher site
See Article on Publisher Site

Abstract

Due to the low crop insurance participation by grain growers in the Pacific Northwest, the performance of insurance programs and the futures market is assessed in this area. Revenue insurance, combined with the futures and government programs, is identified as the optimal risk management portfolio. Although yield risk level, decision makers risk preference, and actuarial fairness of premiums can all affect farmers choices, the current subsidy policy is most influential. The varying subsidy levels induce farmers subsidyseeking incentive and suppress the riskreducing incentive. There is little diversification effect from growing two crops in the rotation instead of one.

Journal

Agricultural Finance ReviewEmerald Publishing

Published: Nov 1, 2002

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