Advisor

Coble, Keith H.

Committee Member

Harri, Ardian

Committee Member

Barnett, Barry J.

Committee Member

Riley, John Michael

Date of Degree

1-1-2013

Document Type

Graduate Thesis - Open Access

Degree Name

Master of Science

College

College of Agriculture and Life Sciences

Department

Department of Agricultural Economics

Abstract

Revenue insurance with shallow loss protection for farmers has been introduced recently. A common attribute of most shallow loss proposals is that they would be arearevenue triggered. The impact on optimal hedge ratios of combining these shallow loss insurance proposals with deep loss farm-level insurance is examined. Since crop insurance, commodity programs and forward pricing are commonly used concurrently to manage crop revenue risk, the optimal combinations of these tools are explored. Numerical analysis in the presence of yield, basis and futures price variability is used to find the futures hedge ratio which maximizes the certainty equivalent of a risk averse producer. The results generally reveal a lower optimal hedge ratio with area-insurance than with individual insurance and show that shallow loss revenue insurance tends to slightly increase optimal hedge ratios.

URI

https://hdl.handle.net/11668/19851

Comments

area crop insurance||simulation||optimal hedge ratio

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