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Abstract
Concerns about the drought of 1988 continuing on into 1989 have lead to
increased interest in the use of crop insurance to mitigate the effects of low
yields on farm income. This paper analyzes the selection of crop insurance
yield guarantee levels and indemnity prices based on risk preferences for
corn/soybean farmers in northeastern Kansas. Using stochastic dominance with
respect to a function analysis, it was determined that for other than the most
risk-preferring producers, some level of crop insurance is contained in the
preferred set of strategies. For the most risk-averse producers, the highest
yield guarantee level and indemnity price election are preferred.