Whole Farm Income Insurance in a Canadian Context

40 Pages Posted: 8 May 2010

See all articles by Calum G. Turvey

Calum G. Turvey

Cornell University - School of Applied Economics and Management

Date Written: May 3, 2010

Abstract

This paper employs mean-variance and mean-skewness optimization to investigate farmers’ crop choices under Gross Revenue Insurance (GRIP), Whole Farm Income Insurance, the Canadian Agricultural Income Stabilization program, and its modified 2008 program AgrInvest. To our knowledge this paper is the first to fully consider the endogenous optimization of whole farm insurance in a farm optimization model. The results indicate that farmers will alter farm plans significantly in response to the type of insurance offered and the level of subsidy. Farmers will take on production risks that they would not otherwise take and this risk taking behavior is exacerbated by subsidy.

Keywords: Agricultural Insurance, Skewness Maximization, Mean-Variance, Farm Income Insurance, GRIP, CAIS, AgrInvest

JEL Classification: C61, D81, G22, Q14, Q12, Q18

Suggested Citation

Turvey, Calum G., Whole Farm Income Insurance in a Canadian Context (May 3, 2010). Available at SSRN: https://ssrn.com/abstract=1603209 or http://dx.doi.org/10.2139/ssrn.1603209

Calum G. Turvey (Contact Author)

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

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