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Should Basic Underwriting Rules be Applied to Average Crop Revenue Election and Supplemental Revenue?

Published online by Cambridge University Press:  26 January 2015

G. Art Barnaby Jr.
G. Art Barnaby Jr.*
Affiliation:
Department of Agricultural Economics, Kansas State University, Manhattan, Kansas
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Abstract

This paper considers methods to adversely select on Average Crop Revenue Election (ACRE) and Supplemental Revenue (SURE). In the case of winter wheat, farmers had a large amount of a priori yield and price information before electing 2009 ACRE. Prior to the August 14 sign-up for ACRE, wheat was 3 months into the marketing year. In most years nearly half of the national average price is determined in the first 3 months of the marketing year. With this available information it was clear that Oklahoma, Texas, and Washington wheat would collect the maximum or near the maximum ACRE payment, while there was little chance that ACRE would pay on Colorado wheat.

Keywords

adverse selectionAverage Crop Revenue ElectionCrop InsuranceSupplemental RevenueQ18
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 42 , Issue 3 , August 2010 , pp. 517 - 535
Copyright
Copyright © Southern Agricultural Economics Association 2010

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References

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