Revenue Protection for Organic Producers: Too Much or Too Little

Ariel Singerman, Chad Hart and Sergio Lence

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: A framework is developed to examine the 2011 pilot program established by the Risk Management Agency (RMA) to insure organic crops. Given that for insurance purposes RMA links organic crop prices to their conventional counterparts by a fixed percentage, we calibrate our model to reflect the organic and conventional corn markets to illustrate the impacts that such pricing potentially has on Revenue Protection coverage under different scenarios. Findings indicate that at the 75% nominal coverage level, RMA's fixed price factor implies an effective coverage ranging from 45 to 106% depending on what the organic to conventional market price ratio is; resulting, therefore, in lower and higher indemnities compared to those organic producers should get when considering their idiosyncratic revenue distribution.

Keywords: crop insurance; organic production; revenue protection (search for similar items in EconPapers)
JEL-codes: Q12 Q14 (search for similar items in EconPapers)
Date: 2011-06-22
New Economics Papers: this item is included in nep-agr
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Related works:
Journal Article: Revenue Protection for Organic Producers: Too Much or Too Little? (2012)
Working Paper: Revenue Protection for Organic Producers: Too Much or Too Little (2012)
Working Paper: Revenue Protection for Organic Producers: Too Much or Too Little (2012)
Working Paper: Revenue Protection for Organic Producers: Too Much or Too Little? (2012)
Working Paper: Revenue protection for organic producers: too much or too little (2012)
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