Thursday, 23 June 2005: 9:00 AM
North & Center Ballroom (Hilton DeSoto)
Purchasing crop insurance is one of the strategies producers can use to reduce risks of income loss due to climate variability. The best approach for reducing risks involves a combination of crop insurance with a pre-harvest marketing plan that includes strategies like hedging and forward contracting. A producers' choice among strategies is often complicated when both price and yield risk are present. However, about 69% of crop failures in the U.S. are because of either drought or excessive moisture. This study explores the possibility of applying climate forecast information to help peanut growers decide which crop insurance to purchase and coverage levels. A crop growth and development model (CROPGRO-Peanut) was used to simulate peanut yield in 3 major peanut producing counties in the Southeast: Henry County, AL, Jackson County, FL, and Mitchell County, GA. Probabilities of collecting peanut crop insurance for different coverage levels (50%-75%) and different planting dates (April 16 June 12) were evaluated for the three counties. Probabilities of collecting insurance varied from 9.9% for peanut planted in May 8 in Henry County (AL) at 50% coverage level to 47.7% for peanut planted in June 12 in Mitchell County (GA) at 75% coverage level. There was a best planting window in all counties within which the probability of collecting insurance or having a crop failure were lower. In general the lower risk window was in between the second and third weeks of May. Results also showed that the probability of collecting insurance for a given planting date varied with ENSO (El Niño Southern Oscillation) phase, implying that ENSO phase forecast can be used to evaluate alternative insurance strategies.
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