An economic analysis of crop insurance options in Manitoba

Abstract

Interest in this study arose from a concern on the part of research scientists and the Manitoba Crop Insurance Corporation that the current Manitoba program meet its intended objective of investment protection at the lowest possible cost. The central role played by the crop insurance program in ameliorating the negative impact of variable farm income in Manitoba underscored the importance of the study. The fact that the current program deviated significantly from the model originally offered emphasized the need for a comprehensive evaluation of the program's ability to fulfill its central objective. Specifically in this study an attempt was made to establish whether or not the crop insurance options available in the current program offered producers in Manitoba a level of coverage sufficient to meet annual out of pocket costs for their wheat, oats, and barley enterprises. A similar comparison was conducted using the now defunct Improved Practises program. A related investigation was conducted to determine what additional costs, depreciation and consumption, might be covered by the higher coverage options where coverage surpluses were generated in excess of out of pocket costs. Finally the effect on the performance of crop insurance options of providing coverage using a five year moving average trend yield method was examined...