The Demand for Commodity Insurance by Developing Country Agricultural Producers : Theory and an Application to Cocoa in Ghana

Show simple item record

collection.link.5
https://openknowledge.worldbank.org/handle/10986/9
collection.name.5
Policy Research Working Papers
dc.contributor.author
Sarris, Alexander
dc.date.accessioned
2014-08-07T20:30:39Z
dc.date.available
2014-08-07T20:30:39Z
dc.date.issued
2002-09
dc.date.lastModified
2017-12-14T04:33:20Z
dc.description.abstract
The author considers the benefit to agricultural producers of commodity price insurance that provides in every year-but in advance of the resolution of production and price uncertainty--a minimum price for a fixed or variable portion of production. Under the assumption that producers do not change their long term production and income diversification pattern, the author suggests a theoretical framework that leads to explicit formulas of the benefit in providing this type of insurance. He shows that this benefit depends not only on the actuarially fair insurance premium, but also on household-specific factors that depend on the attitudes to risk, the consumption smoothing parameters, and the household-specific exposures to income risks. The author applies the theoretical framework for Ghana, using the Ghana Living Standards Survey data to specify various classes of cocoa-producing households and monthly price data for both domestic and international prices, to formulate appropriate models for ascertaining price risks faced by producers. The author gives empirical estimates of the actuarially fair premium, and shows that they are smaller than market-based put option prices from organized exchanges. The overall benefit in providing minimum price insurance to households, however, turns out to be substantially higher than the actuarially fair premiums and the market-based put option prices. This is due to both the magnitude of the uncertainties facing the households, as well as their risk and consumption smoothing behavior.
en
dc.identifier
http://documents.worldbank.org/curated/en/2002/09/2017580/demand-commodity-insurance-developing-country-agricultural-producers-theory-application-cocoa-ghana
dc.identifier.uri
http://hdl.handle.net/10986/19271
dc.language
English
dc.language.iso
en_US
dc.publisher
World Bank, Washington, DC
dc.relation.ispartofseries
Policy Research Working Paper;No. 2887
dc.rights
CC BY 3.0 IGO
dc.rights.uri
http://creativecommons.org/licenses/by/3.0/igo/
dc.subject
ADEQUATE SAFETY NETS
dc.subject
AGENTS
dc.subject
AGRICULTURAL INSURANCE
dc.subject
AGRICULTURAL OUTPUT
dc.subject
AGRICULTURE
dc.subject
ASSETS
dc.subject
BENCHMARK
dc.subject
BENEFICIARIES
dc.subject
COMMODITIES
dc.subject
CONSUMER PRICE INDEX
dc.subject
CONSUMPTION FUNCTION
dc.subject
CONSUMPTION SMOOTHING
dc.subject
CONTINGENT VALUATION
dc.subject
COVARIATE SHOCKS
dc.subject
COVERAGE
dc.subject
CPI
dc.subject
CROP DIVERSIFICATION
dc.subject
CROP INSURANCE
dc.subject
DECISION VARIABLES
dc.subject
DEVELOPED COUNTRIES
dc.subject
DICHOTOMOUS CHOICE
dc.subject
DISCOUNT RATE
dc.subject
DROUGHT
dc.subject
ECONOMIC BEHAVIOR
dc.subject
EMPIRICAL ANALYSIS
dc.subject
EQUILIBRIUM
dc.subject
EXPECTED UTILITY
dc.subject
EXPECTED VALUE
dc.subject
EXPECTED VALUES
dc.subject
EXPENDITURES
dc.subject
EXPORTS
dc.subject
FARM INCOME
dc.subject
GDP
dc.subject
HOUSEHOLD CONSUMPTION
dc.subject
HOUSEHOLD INCOME
dc.subject
IDIOSYNCRATIC SHOCKS
dc.subject
INCOME
dc.subject
INCOME RISKS
dc.subject
INCOME SUPPORT
dc.subject
INDEMNITY
dc.subject
INSURANCE
dc.subject
INSURANCE CONTRACTS
dc.subject
INSURANCE INDUSTRY
dc.subject
INSURANCE SYSTEMS
dc.subject
LEISURE
dc.subject
LIBERALIZATION
dc.subject
LIQUIDITY
dc.subject
LIVING STANDARDS
dc.subject
MACROECONOMIC GROWTH
dc.subject
OPPORTUNITY COST
dc.subject
OPTIMIZATION
dc.subject
PER CAPITA INCOME
dc.subject
POLICY RESEARCH
dc.subject
POOR
dc.subject
POVERTY ALLEVIATION
dc.subject
POVERTY LINE
dc.subject
PREMIUMS
dc.subject
PRICE FLOOR
dc.subject
PRICE FLUCTUATIONS
dc.subject
PRICE RISK
dc.subject
PRICE VARIATIONS
dc.subject
PRIVATE INSURANCE
dc.subject
PRODUCERS
dc.subject
PRODUCTION INPUTS
dc.subject
PRODUCTION PATTERNS
dc.subject
PROGRAMS
dc.subject
PUBLIC INSURANCE
dc.subject
REAL INCOME
dc.subject
RECIPROCITY
dc.subject
RISK
dc.subject
RISK AVERSION
dc.subject
RISK MANAGEMENT
dc.subject
RISK MITIGATION
dc.subject
SAFETY NETS
dc.subject
SAVINGS
dc.subject
SELF INSURANCE
dc.subject
SHARECROPPING
dc.subject
SMOOTHING CONSUMPTION
dc.subject
TAX REVENUE
dc.subject
TAX REVENUES
dc.subject
TIMBER
dc.subject
TIME SERIES
dc.subject
UTILITY FUNCTION
dc.subject
WEATHER PATTERNS
dc.subject
WILLINGNESS TO PAY
dc.subject
WTP COMMODITY PRODUCERS
dc.subject
DEVELOPING COUNTRIES
dc.subject
AGRICULTURAL PRODUCT MARKETING
dc.subject
INSURANCE
dc.subject
CASE STUDIES
dc.subject
COCOA TRADE
dc.subject
COMMODITY PRICES
dc.subject
PRICE VOLATILITY
dc.subject
INSURANCE PREMIUMS
dc.subject
HOUSEHOLD INCOME
dc.subject
RISK MANAGEMENT
dc.subject
HOUSEHOLD CONSUMPTION
dc.subject
INCOME SECURITY
dc.subject
LIVING STANDARDS INDICATORS
dc.subject
PRICE INDEXES
dc.subject
PRICE MARGINS
dc.subject
OPTION VALUE
dc.title
The Demand for Commodity Insurance by Developing Country Agricultural Producers : Theory and an Application to Cocoa in Ghana
en
okr.crosscuttingsolutionarea
Jobs
okr.doctype
Publications & Research :: Policy Research Working Paper
okr.doctype
Publications & Research
okr.docurl
http://documents.worldbank.org/curated/en/2002/09/2017580/demand-commodity-insurance-developing-country-agricultural-producers-theory-application-cocoa-ghana
okr.globalpractice
Social Protection and Labor
okr.globalpractice
Poverty
okr.googlescholar.linkpresent
yes
okr.identifier.doi
10.1596/1813-9450-2887
okr.identifier.externaldocumentum
000094946_02100204022276
okr.identifier.internaldocumentum
2017580
okr.identifier.report
WPS2887
okr.language.supported
en
okr.pdfurl
http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2002/10/12/000094946_02100204022276/Rendered/PDF/multi0page.pdf
en
okr.region.administrative
Africa
okr.region.country
Ghana
okr.sector
Agriculture, fishing, and forestry :: General agriculture, fishing and forestry sector
okr.topic
Economic Theory and Research
okr.topic
Insurance and Risk Mitigation
okr.topic
Environmental Economics and Policies
okr.topic
Health Economics and Finance
okr.topic
Social Protections and Labor :: Labor Policies
okr.topic
Services and Transfers to Poor
okr.topic
Payment Systems and Infrastructure
okr.topic
Poverty Reduction
okr.unit
Off of Sr VP Dev Econ/Chief Econ (DECVP)
okr.volume
1

Show simple item record



This item appears in the following Collection(s)