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Implications of Crop Insurance for Farmers and Lenders

  • David J. Leatham (a1), Bruce A. McCarl (a1) and James W. Richardson (a1)

Abstract

The effect of the farmer's choice of crop insurance was evaluated on both the farmer's and lender's performance. This was done using whole-farm, Monte Carlo simulation for Texas wheat/sorghum operations. Results indicate crop insurance would be preferred by moderately risk-averse farmers when farm firm failure became an issue or the insurance loss ratio approached one. A lender always preferred the use of crop insurance, especially when the probability of firm bankruptcy was an issue.

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Implications of Crop Insurance for Farmers and Lenders

  • David J. Leatham (a1), Bruce A. McCarl (a1) and James W. Richardson (a1)

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