Crop Insurance and Disaster Assistance Designs for Wheat and Grain Sorghum

Abstract

Abstract This study compares the effectiveness of two crop insurance and two disaster assistance program designs used in conjunction with a government commodity program and a linked crop insurance/government commodity program design. Stochastic dominance analysis of farm‐level net return distributions is used to select the preferred design(s). The results indicate that the disaster assistance programs are preferred over the alternatives. The results also suggest that individual crop insurance is preferred to area crop insurance. A subsidy is required for risk‐averse managers to prefer area crop insurance to individual crop insurance.