Revenue Protection for Organic Producers: Too Much or Too Little?

A framework is developed to examine organic crop insurance established by the Risk Management Agency (RMA). Given that the RMA links organic and conventional crop prices, the model is calibrated to reflect both markets to illustrate the impacts that pricing has on insurance coverage. Findings indicate that at the 75% coverage level, the RMA’s fixed-price factor implies an effective coverage ranging from 43% to 105% depending on the ratio of planting-time organic to conventional market prices. Results suggest the RMA’s program is likely to induce adverse selection because the nominal coverage level is likely to deviate substantially from the effective coverage.


Issue Date:
2012
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/142353
Published in:
Journal of Agricultural and Resource Economics, Volume 37, Number 3
Total Pages:
20




 Record created 2017-04-01, last modified 2017-04-28

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