Economic Research Report No. (ERR-212) 40 pp

August 2016

How Do Time and Money Affect Agricultural Insurance Uptake? A New Approach to Farm Risk Management Analysis

This report presents a new approach to the analysis of demand for crop insurance. Farmers consider many crop seasons when making production and risk management decisions. When savings are considered, wealthier farmers will spend less on insurance and self-insure through savings, while limited-resource farmers with low farm income will use savings, if available, to increase insurance coverage. Errata: On August 11, 2016, a correction was made to the first sentence of the second paragraph of page 1. The original report stated the Federal Crop Insurance Reform Act (FCIRA) was passed in 1995, when, in fact, the Act was passed in 1994. While the changes to farm insurance as a result of FCIRA took effect in 1995, FCIRA became law in 1994.

Keywords: agricultural risk management, crop insurance, Federal Crop Insurance, savings

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