AgCenter economists analyze crop insurance, other tools

From insurance and policy issues to productions costs, LSU AgCenter economists are researching a number of topics to help farmers maximize profits.

Economist Lawson Connor has been studying how Louisiana farmers use crop insurance and what options may work best for them. Some farmers look at insurance as a risk management tool, while others treat it as more of an investment. Those viewpoints can affect which programs they enroll in and what coverage they receive — which can be provided based on revenue or yields.

Connor is trying to determine which approach is most appropriate for Louisiana.

“Several studies focusing on farms in the Midwest have taken aim at the question,” he said. “However, much less has been done on this issue in the Midsouth, and a severe need for such research in the region exists.”

Connor has found that most soybean producers in Louisiana regard insurance as an investment — that is, there is an expected rate of return — and are less likely to select programs that pay out based on yield.

“Some words of caution exist in our findings as well as opportunities for further work,” he added. “Our study suggests that the returns to the subsidized crop insurance rates on soybeans in the northeastern portion of the state may be slimmer than in other areas of the state due in part to catastrophic risk loading of crop insurance rates across the state. Therefore, a risk management rather than a revenue view of the program may be more appealing.”

Economist Naveen Adusumulli has been working on a project focused on farmers who receive cost-share assistance to implement conservation practices. He wants to find out whether they continue to use those conservation practices after the financial assistance ends, or if they shift to different practices or stop using conservation practices altogether.

Economist Michael Deliberto analyzes farm programs and commodity costs to develop “decision tools” for farmers. One of those tools is an annual budget that helps farmers project production costs and returns for corn, grain sorghum, soybeans and wheat. The data is provided in the Microsoft Excel spreadsheet format, allowing producers to tailor the budgets to their individual farm needs.

Deliberto’s other projects include a tool for estimating potential payments under agriculture risk coverage (ARC) and price loss coverage (PLC) programs; a tool to help select the appropriate level of crop insurance; a monthly corn, soybean, rice and cotton market report featuring a summary of domestic and international factors affecting commodity prices; and a quarterly agricultural policy newsletter focused on trade, labor, conservation programs and other policy issues.

9/17/2021 9:01:59 PM
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