Whole-Farm Revenue Protection as a Factor of Economic Stability in Crop Production
Crop production is largely unprotected and exposed to a great number of production factors. On the other hand, farmers are exposed to fluctuations in the market prices of their products every year, which often has a negative impact on the profits made. There are various risk management measures in p...
Main Authors: | , , , |
---|---|
Format: | Article |
Language: | English |
Published: |
MDPI AG
2020-08-01
|
Series: | Sustainability |
Subjects: | |
Online Access: | https://www.mdpi.com/2071-1050/12/16/6349 |
id |
doaj-088971c92f784e9d9ad16f5011419578 |
---|---|
record_format |
Article |
spelling |
doaj-088971c92f784e9d9ad16f50114195782020-11-25T03:57:24ZengMDPI AGSustainability2071-10502020-08-01126349634910.3390/su12166349Whole-Farm Revenue Protection as a Factor of Economic Stability in Crop ProductionŽeljko Kokot0Todor Marković1Sanjin Ivanović2Maja Meseldžija3Faculty of Agriculture, University of Novi Sad, 21000 Novi Sad, SerbiaFaculty of Agriculture, University of Novi Sad, 21000 Novi Sad, SerbiaFaculty of Agriculture, University of Belgrade, 11080 Zemun, SerbiaFaculty of Agriculture, University of Novi Sad, 21000 Novi Sad, SerbiaCrop production is largely unprotected and exposed to a great number of production factors. On the other hand, farmers are exposed to fluctuations in the market prices of their products every year, which often has a negative impact on the profits made. There are various risk management measures in plant production, and insurance is certainly one of the most effective instruments. One of the recent insurance models is Whole-Farm Revenue Insurance (WFRP), which is an American insurance model that has been applied since 2015. The essence of WFRP is to ensure that all crops on the farm are secured against production and market risks with only one policy. The aim of the research in this paper is to present WFRP as an entirely new model of revenue insurance on the example of a typical Serbian farm specializing in crop production. The WFRP model works by determining the insured revenue before the start of the production year. If at the end of the production year, for any reason, the realized revenue falls below the level of insured revenue, the farmer is entitled to indemnification. Due to the drought that hit the region where the analyzed farm is located, the yields were reduced, and thus the expected revenue was also reduced, and the farmer was entitled to damages of $5697. On the other hand, it is the farmer’s obligation to pay $373 to the insurer as a risk transfer fee. The authors proved that even such complex insurance models can be applied in countries such as Serbia, where awareness of the importance of insurance of agricultural production is still not developed.https://www.mdpi.com/2071-1050/12/16/6349crop productioninsurancerevenuewhole-farmone policy |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Željko Kokot Todor Marković Sanjin Ivanović Maja Meseldžija |
spellingShingle |
Željko Kokot Todor Marković Sanjin Ivanović Maja Meseldžija Whole-Farm Revenue Protection as a Factor of Economic Stability in Crop Production Sustainability crop production insurance revenue whole-farm one policy |
author_facet |
Željko Kokot Todor Marković Sanjin Ivanović Maja Meseldžija |
author_sort |
Željko Kokot |
title |
Whole-Farm Revenue Protection as a Factor of Economic Stability in Crop Production |
title_short |
Whole-Farm Revenue Protection as a Factor of Economic Stability in Crop Production |
title_full |
Whole-Farm Revenue Protection as a Factor of Economic Stability in Crop Production |
title_fullStr |
Whole-Farm Revenue Protection as a Factor of Economic Stability in Crop Production |
title_full_unstemmed |
Whole-Farm Revenue Protection as a Factor of Economic Stability in Crop Production |
title_sort |
whole-farm revenue protection as a factor of economic stability in crop production |
publisher |
MDPI AG |
series |
Sustainability |
issn |
2071-1050 |
publishDate |
2020-08-01 |
description |
Crop production is largely unprotected and exposed to a great number of production factors. On the other hand, farmers are exposed to fluctuations in the market prices of their products every year, which often has a negative impact on the profits made. There are various risk management measures in plant production, and insurance is certainly one of the most effective instruments. One of the recent insurance models is Whole-Farm Revenue Insurance (WFRP), which is an American insurance model that has been applied since 2015. The essence of WFRP is to ensure that all crops on the farm are secured against production and market risks with only one policy. The aim of the research in this paper is to present WFRP as an entirely new model of revenue insurance on the example of a typical Serbian farm specializing in crop production. The WFRP model works by determining the insured revenue before the start of the production year. If at the end of the production year, for any reason, the realized revenue falls below the level of insured revenue, the farmer is entitled to indemnification. Due to the drought that hit the region where the analyzed farm is located, the yields were reduced, and thus the expected revenue was also reduced, and the farmer was entitled to damages of $5697. On the other hand, it is the farmer’s obligation to pay $373 to the insurer as a risk transfer fee. The authors proved that even such complex insurance models can be applied in countries such as Serbia, where awareness of the importance of insurance of agricultural production is still not developed. |
topic |
crop production insurance revenue whole-farm one policy |
url |
https://www.mdpi.com/2071-1050/12/16/6349 |
work_keys_str_mv |
AT zeljkokokot wholefarmrevenueprotectionasafactorofeconomicstabilityincropproduction AT todormarkovic wholefarmrevenueprotectionasafactorofeconomicstabilityincropproduction AT sanjinivanovic wholefarmrevenueprotectionasafactorofeconomicstabilityincropproduction AT majameseldzija wholefarmrevenueprotectionasafactorofeconomicstabilityincropproduction |
_version_ |
1724461079668457472 |