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Evaluating Crop and Revenue Insurance Products as Risk Management Tools for Texas Cotton Producers

Published online by Cambridge University Press:  28 April 2015

James E. Field ,
Sukant K. Misra  and
Octavio Ramirez
James E. Field
Affiliation:
College of Agricultural Sciences and Natural Resources, Texas Tech University, Lubbock, TX
Sukant K. Misra
Affiliation:
College of Agricultural Sciences and Natural Resources, Texas Tech University, Lubbock, TX
Octavio Ramirez
Affiliation:
Department of Agricultural and Applied Economics, Texas Tech University, Lubbock, TX
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Abstract

This paper develops and illustrates the application of a procedure to evaluate and compare the cost effectiveness of alternative crop insurance products for cotton in terms of their effect on expected producer net returns and the variation of net returns. Farm unit-level cotton yields and state-level price distributions are estimated by a multivariate nonnormal parametric modeling procedure and used to simulate the net returns to alternative crop insurance products over a 10-year planning horizon. The ranking of alternative insurance products using third-degree stochastic dominance is presented for Texas cotton producers.

Keywords

cottoncrop insurancemultivariate nonnormal parametric modelingstochastic dominanceC5Q1
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 35 , Issue 1 , April 2003 , pp. 39 - 52
Copyright
Copyright © Southern Agricultural Economics Association 2003

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