WHOLE FARM REVENUE INSURANCE AS A NEW MODEL OF CROP INSURANCE

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Željko Kokot
Todor Markovic
Aleksandra Martinovska-Stojcheska
Ivana Janeska Stamenkovska

Abstract

Agricultural production is a specific area of business that is strongly influenced by natural, climatic, market, financial and institutional factors. These are all hazards not depending on the will of man and his activities, and it is necessary to foresee them and to insure against them. Crop and fruit insurance is the most effective risk management instrument in open field crop production. The aim of this paper is to present a new model of crop insurance which began to apply in 2015 in the United States. Every farm, by its implementation, provides farm’s expected total revenue that may be affected by the operation of both natural and climate risks, and market risks too, which are manifested through fluctuations in market prices. In this way all farm crops are insured against any risks with just one policy. Analyzed farm has experienced revenue loss due to drought, therefore it has indemnity right in the amount of 2,500 €. Premium costs amount to 330 €.

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