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Corn Growers Group
1 years, 4 months ago
from Corn Growers Group
"In this report, we examine some key data associated with RMA corn and soybean program participation. We do not estimate an elasticity, but rather show evidence of a consistent pattern in in how much farmers are willing to pay for crop insurance. We use the dramatic changes in crop value between 2011 and 2016 and variation in riskiness across regions to show a remarkable constant in crop insurance demand. We find that across periods of high and low crop value and across regions of low and high risk – corn and soybean farmers are willing to pay out-of-pocket no more than four percent of the expected value of the crop. If this is true, it has implications for the demand for crop insurance when subsidy is changed."
http://blogs.msucares.com/agecon/2017/03/24/the-four-percent-rule-of-crop-insurance/