Applied Risk Analysis Section Track Sessions

Crop insurance programs have moved from the periphery to the core of U.S. federal risk support for crop producers. Not only has the program grown in participation, but coverage levels and revenue products have increased. Further the rating system for the program has been the subject of significant research over the past decade. The upshot is that a considerable evolution in rating has occurred. This session will provide an update of current rating procedures and provide an overview of the research that led to the current system. Finally, Tom Worth, Chief Actuary of USDA/RMA will provide an overview of the challenges and future directions for program rating.

Food safety is something we all desire and yet there are numerous challenges and issues that need to be addressed today and as the systems we depend on continue to evolve. Implementing strategies and assigning responsibilities within the systems that produce and deliver the basic foods we require to sustain life (and a large portion of several economies) necessitate we address the risks and mitigation protocols for various agents. This session will start with a 5-minute overview of The Food Safety Modernization Act from discussant Sandy Hoffmann, followed by a sequence of four papers on how producers, food companies, consumers and others will be directly impacted by new programs and standards regarding foods. Presentations from those researching food safety protocols will provide additional insights and frame questions for continued research through examination of producer indemnification for food safety events and the role of private standards; the management of zero-tolerance rules when detection can be impractical or impossible; and the costs of adopting food safety programs at the farm-level.

Weather and climatic conditions are major sources of uncertainty in agricultural production. Climate science, computer modeling and agricultural technologies hold promise for better managing the uncertainty associated with weather. This symposium highlights some of the work being done to transform weather and climate information into more usable products for farmers. USDA-NIFA has recently funded the integrated research and extension project Useful to Usable (U2U): Transforming Climate Variability and Change Information for Cereal Crop Producers. This project is examining the interaction of weather and climate variables in agricultural production decisions across a twelve state region encompassing the Corn Belt. The three presentations for this symposium outline three different aspects of the U2U project. The first presentation will provide a corn production weather/climate-driven decision calendar to assist the above-mentioned stakeholders in connecting intra-seasonal and inter-seasonal agricultural weather/climate information. The second presentation will present preliminary results of on-going crop modeling efforts and the adaptive strategies for maximizing agronomic productivity and farm profitability while reducing the impact of climate-related risks. The third presentation will present the fieldwork days data and illustrate its incorporation into a decision support tool for a crop production decision such as fertilizer management. After the 3 presentations, the moderator will lead an audience discussion of the concepts presented. The objective will be to discover oversights in the current program and to garner insight into how weather and climate information can be transformed to create decision support tools through the outreach component of the project.

Producers in developing countries tend to be more vulnerable to production risks because they are more dependent on agriculture and often lack access to insurance products. The paucity of insurance instruments could be contributor to the existence of poverty traps. Production shocks impact various aspects of rural economies, and households that own few assets can be pushed toward an (often irreversible) downward spiral into destitution. Systemic risks are of particular importance, since losses due to extreme events as a proportion of GDP in these countries have been historically higher than in developed countries. Design and implementation of insurance programs for developing countries face a variety of challenges. Among these, the most common are the lack of reliable historical data, information asymmetry, and lack of appropriate institutional infrastructure. The proposed session presents three papers which deal with specific practical issues encountered in the development, analysis, and/or implementation of insurance programs in developing countries.

Subsidized crop insurance has become the major farm program. Crop insurance subsidies already amount to about $6 Billion per year and current proposals for replacing direct payments with “shallow-loss protection” would raise the levels of subsidized protection and increase the cost of the program. The economic justification for subsidizing farming in this way deserves continued critical public examination.