Year of Publication

2020

Degree Name

Master of Science (MS)

Document Type

Master's Thesis

College

Agriculture, Food and Environment

Department

Agricultural Economics

First Advisor

Dr. Tyler Mark

Abstract

The 2018 Farm Bill has reopened commodity program enrollment for producers, and thus renewed interest in the Supplemental Coverage Option (SCO) of the Federal Crop Insurance Program (FCIP). This thesis examines the potential risk management benefits afforded to Kentucky corn, soybean and wheat producers by the SCO.

A simulation model is used to rank downside-risk minimization of the common Multi-peril Crop Insurance Policies (MPCI) policies both with and without the SCO for various farm-level yield risk and farm- to SCO area-level yield correlations.

The study found that the SCO endorsement was a component of every optimal insurance choice for all possible combinations examined in this study. Soybeans had the greatest homogeneity, while wheat had the greatest variability in optimal insurance choice.

The results show that the SCO should enter into a producer's crop insurance decision and also commodity program enrollment decision — when applicable. The yearly commodity program enrollment deadlines occurring throughout the life of the current Farm Bill make this study especially timely.

Digital Object Identifier (DOI)

https://doi.org/10.13023/etd.2020.194

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