Farmer Participation, Entry and Exit Decisions in the Italian Crop Insurance Program

Journal of Agricultural Economics. 67(3)

29 Pages Posted: 27 Apr 2016

See all articles by Fabio Gaetano Santeramo

Fabio Gaetano Santeramo

University of Foggia

Felice Adinolfi

University of Bologna

Fabian Capitanio

University of Naples Federico II

Barry K. Goodwin

North Carolina State University

Date Written: January 15, 2016

Abstract

The factors affecting the demand for agricultural insurance in the USA have been extensively studied over the last two decades. However, the determinants of a farm's entry and exit decisions in the insurance market have received relatively little attention. Turnover in the insurance book of business is an important issue in most private and public crop insurance plans. Moreover, insurance markets in the EU are still largely under-investigated. We investigate empirically the determinants of crop insurance participation in Italy. We show that the participation rate is high for large firms and that it is negatively correlated with crop diversification, which is itself a form of insurance. High premiums tend to inhibit both entry and exit from the insurance market. Larger and wealthier farms are more likely to adopt insurance and renew coverage over time. We discuss implications of our results for public intervention and the private industry. In particular, we demonstrate that the decision to drop coverage by an insured grower may differ significantly from the corresponding decision to enroll in an insurance programme by an uninsured farmer. To the extent that policymakers want to encourage participation in subsidized crop insurance programmes, education and outreach efforts toward uninsured farmers may differ substantially from those directed toward keeping insured farmers enrolled in the programme. We investigate these differences.

Keywords: Crop insurance, Entry, EU, Exit, Insurance, Participation, Risk, Turnover, Italy

JEL Classification: G22, Q12, Q18

Suggested Citation

Santeramo, Fabio Gaetano and Adinolfi, Felice and Capitanio, Fabian and Goodwin, Barry K., Farmer Participation, Entry and Exit Decisions in the Italian Crop Insurance Program (January 15, 2016). Journal of Agricultural Economics. 67(3) , Available at SSRN: https://ssrn.com/abstract=2770074

Fabio Gaetano Santeramo (Contact Author)

University of Foggia ( email )

Largo Papa Giovanni Paolo
Foggia, 71100
Italy

Felice Adinolfi

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Fabian Capitanio

University of Naples Federico II ( email )

via Cinthia, 4
Naples, Caserta 80126
Italy

Barry K. Goodwin

North Carolina State University ( email )

Box 8109
324 C Nelson
Raleigh, NC 27695-8109
United States
919-515-4547 (Phone)
919-515-1824 (Fax)

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