An assessment of risk management strategies for grain growers in the Pacific Northwest
Abstract
Due to the low crop insurance participation by grain growers in the Pacific Northwest, the performance of insurance programs and the futures market is assessed in this area. Revenue insurance, combined with the futures and government programs, is identified as the optimal risk management portfolio. Although yield risk level, decision maker’s risk preference, and actuarial fairness of premiums can all affect farmers’ choices, the current subsidy policy is most influential. The varying subsidy levels induce farmers’ subsidy‐seeking incentive and suppress the risk‐reducing incentive. There is little diversification effect from growing two crops in the rotation instead of one.
Keywords
Citation
Ke, B. and Holly Wang, H. (2002), "An assessment of risk management strategies for grain growers in the Pacific Northwest", Agricultural Finance Review, Vol. 62 No. 2, pp. 117-133. https://doi.org/10.1108/00214920280001133
Publisher
:MCB UP Ltd
Copyright © 2002, MCB UP Limited