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This study examines the risk management strategies and preferences of specialty crop producers in New York, and the implications for crop insurance programs. The findings suggest targeted programs, program expansion, and education needs for these producers.
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RISK MANAGEMENT SURVEY OF SPECIALTY CROP PRODUCERS IN NEW YORK -- IMPLICATIONS FOR CROP INSURANCE Gerald B. White Wen-fei L. Uva Mei-Luan Cheng Dept. of Applied Economics and Management Cornell University
Background • New York is one of the Under-Served States for the federal crop insurance and risk management tools • Specialty crop producers in particular utilize even less of these tools than others
What are Specialty Crops in This Study? • Fruits, vegetable, floriculture, nursery, maple syrup, Christmas trees, turf, aquaculture, honey, and mushroom enterprises.
Questions • What additional issues are there to be considered when developing risk management strategies for specialty crops compared to other crops? • What are the characteristics of specialty crops that made crop insurance less attractive or more problematic in the design of viable programs? • What special considerations related to crop insurance for these specialty crops?
Survey Process • Partnership • USDA Risk Management Agency • Land grant universities from 4 states (CA, FL, PA, NY) • National Agricultural Statistics Service – state offices • Cornell Team: Jerry White, Wen-fei Uva, and Mei-Luan Cheng • The survey asks for information about crops grown, marketing channel utilized, source of risks, and growers’ use of crop insurance • 4 Listening Sessions in Summer 2002 (White)
Responses • The New York Agricultural Statistic Service mailed 8,998 surveys to specialty crop producers in New York State in February 2002 • We received 2,808 usable responses for a response rate of 31.2%.
Primary Specialty Crop Enterprises Responded to the Survey Included:
Extent of Profit Volatility • The profit for Bee and honey production was the most volatile. • Large profit fluctuation also occurred for apples, onions, potatoes, and other fruits. • Greenhouse and Christmas tree had the most stable profits
The Effect of Different Sources of Risk on Net Farm Income (1=most effect, 2=next most….)
Risk Management Tool Preferences (1=most preferred, 2=next in degree of preference….)
Preferred Risk Management Tools Processing vs. Fresh Market (1=most preferred, 2=next in degree of preference….)
Reasons for Insured: (1=most important, 2=next in degree of importance….)
Reasons for Not Insured: (1=most important, 2=next in degree of importance….)
How to Improve Crop Insurance? (1=most important, 2=next in degree of importance….)
Targeted Programs • Different specialty crops have different risks. • Risk management products should be different. • Quality is more important to fresh producers. • Emphasis on crops with high yield fluctuation • Bee/honey and maple syrup are good candidates for new products • Highly fluctuating yields and fairly large number of producers
Program Expansion • AGR is a good option for crops with high price and/or profit variability and operations with diversified cropping. • Availability & record keeping (AGR-Lite) • Low coverage for single crop growers • Producers are willing to pay higher premium if higher coverage made available to them or extended coverage • inventory replacement, storage loss or quality loss for high value crops
Education Needs • Need education to improve the knowledge among producers on what risk management tools and crop insurance products are best for them. • > 2/3 of growers indicated that they are not more familiar with crop insurance than 5 years ago. • Programs for small farms • Many growers did not purchase crop insurance because they believed they were too small
For a complete report: http://hortmgt.aem.cornell.edu/programs/riskmgt.htm