Date of Graduation

5-2019

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor/Mentor

Dixon, Bruce L.

Committee Member

Nalley, Lawton L.

Second Committee Member

Watkins, Kenton B.

Keywords

Agricultural policy; Crop insurance; Farm bill; Hybrid cultivators; revenue protection; Rice; yield protection

Abstract

Rice production differs from most other field crops by distinct differences in yields across cultivars and rice producers being paid for yield after post-harvest milling. Using eleven years (2003-2013) of Arkansas harvest data from performance trials in six different locations, hybrids have 19% higher paddy yields and head rice yield rate 1.7% lower than conventional cultivars. Given the 2014 Farm Bill’s emphasis on crop insurance as a risk management tool for producers, these variations in yield among cultivars have significant implications for rice producers. Comparing national level, crop insurance data on corn, soybeans and rice indicates rice producers strongly prefer yield protection policies (including catastrophic policies) compared with corn and soybean producers who prefer revenue protection. In rice yield and revenue crop insurance policies, no premium distinctions are made on the basis of cultivar. Adjustments for adverse milling outcomes are made only in the most extreme cases. Using an econometric model to predict paddy yields, milled rice yields and head rice yields, the relative returns to yield protection and revenue protection crop insurance are estimated on a per acre basis for both hybrid and conventional cultivars. Additionally, a policy expanding current milling deficiency criteria to milling deficiencies is explored. Results indicate mean loss-cost hybrids exceed mean loss-cost ratios for conventional cultivars for revenue protection by 0.37 and by 0.47 for yield protection. The results also suggest that rice producers should prefer revenue protection policies over yield protection policies (based on economic returns), and they should insure their rice crops at higher buy-up levels than they currently do. A revenue protection policy that would cover adverse milling outcomes would increase the mean indemnity by about 20%.

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