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Department of Agricultural Economics and Rural Sociology Pennsylvania State University
Growth and opportunity for the US dairy industry: recommendations from Secretary Wolff's Dairy Policy Round Table
B. Goodwin, O. Mahul (2004)
Risk Modeling Concepts Relating to the Design and Rating of Agricultural Insurance ContractsS&P Global Market Intelligence Research Paper Series
Saleem Shaik, B. Barnett, Keith Coble, J. Miller, T. Hanson, S. Koontz, D. Hoag, D. Thilmany, J. Green, J. Grannis (2005)
Insurability conditions and livestock disease insurance.
K. Coble
Federal crop insurance and farm programs: will WTO of budget concerns shape the debate?
L. Maynard, C. Wolf, M. Gearhardt
Can futures and options markets hold the milk price safety net?
C. Bertini, A. Jr. Schumacher, R.L. Thompson
Modernizing America's food and farm policy: vision for a new direction
S. Makki, A. Somwaru (2001)
Asymmetric Information in the Market for Yield and Revenue Insurance Products
L. Maynard, C. Wolf, Matthew Gearhardt (2005)
Can Futures and Options Markets Hold the Milk Price Safety Net? Policy Conflicts and Market Failures in Dairy HedgingApplied Economic Perspectives and Policy, 27
George Rejda, Michael McNamara (1978)
Principles of risk management and insurance
Bernard Silverman (1987)
Density Estimation for Statistics and Data Analysis
Purpose – The purpose of this paper is to examine the sources and magnitude of variation in accrual adjusted gross farm revenue and farm revenue net of feed purchases on Michigan dairy farms representative of Upper Midwest dairy farms. The paper aims to assess whether adjusted gross revenue‐type insurance instruments meet insurability conditions when applied to dairy farms. Design/methodology/approach – Accrual adjusted dairy farm revenue and revenue net of feed purchased from Michigan dairy farm panel data from 1995 through 2006 were detrended and summarized. Variance decomposition was used to identify sources of variation in adjusted gross revenue and adjusted gross revenue less feed purchases. In‐sample insurance premiums were estimated and Monte Carlo simulations were used to adjust these premiums for out‐of‐sample considerations. Findings – Milk price variation was the largest source of variation while milk production per cow varied little. Farms with smaller herds and those with larger percentages of farm revenue from crop sales had higher relative revenue variability and would trigger a higher frequency of indemnities under a whole farm revenue insurance contract. Research limitations/implications – Because the data analyzed conclude in 2006, the volatility of the past couple of years is not reflected. Therefore, researchers are encouraged to test the proposed insurance feasibility further with more recent data. Practical implications – The paper addresses considerations for the development and commercialization of a feasible dairy revenue insurance instrument. Originality/value – This paper fulfils a need to understand magnitude and source of revenue variation on dairy farms and how insurance might mitigate negative consequences of this variation.
Agricultural Finance Review – Emerald Publishing
Published: Nov 6, 2009
Keywords: United States of America; Agriculture; Income; Insurance; Risk management
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