A COMPARATIVE-EVALUATION OF YIELD RISK REDUCTIONS WITH ALTERNATIVE CROP INSURANCE PROGRAMS IN MANITOBA

Three crop insurance programs are evaluated in terms of their effectiv eness of yield risk reductions for 371 Manitoba farms. The examination is first conducted with a proposed index method, with which the relat ive yield risk reduction magnitude is calculated and compared for each farm under each alternative program. The generalized stochastic domin ance (GSD) methodology is also used to provide an alternative analytic al framework in analyzing producers' relative preferences among those alternatives by comparing the net yield distributions generated by eac h program for each farm. The results suggest that, given an actuariall y sound basis, the fully individualized crop insurance (FI) program is the most favorable choice for risk-averse producers. The area coverag e and individual indemnity program (IA) is generally the second best o ption. The full area crop insurance program (FA) is least preferred by risk-averse farmers.