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Crop Insurance Alternatives for Hay Crop Insurance Conference Fargo, North Dakota January 20, 2003 Matthew A. Diersen, Ph.D. Economics Department South Dakota State University. Outline. Why look at hay insurance? National perspective Tri-state perspective Why isn’t it working? Looking ahead.

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  1. Crop Insurance Alternatives for HayCrop Insurance ConferenceFargo, North DakotaJanuary 20, 2003Matthew A. Diersen, Ph.D.Economics DepartmentSouth Dakota State University

  2. Outline • Why look at hay insurance? • National perspective • Tri-state perspective • Why isn’t it working? • Looking ahead

  3. Motivation • Structural changes • Drought bringing awareness • Historic disaster aid ties • Refinements in product(s)

  4. Literature “The U.S. Hay Market: Higher Prices in 1996/97” - Shields and Baker, Agricultural Outlook (1996) “U.S. Hay Production” - Dismukes and Zepp, Economic Research Service Staff Paper No. 9607 (1996) “Should This Crop Be Insured?” - Harvey, Hay & Forage Grower (1998)

  5. Literature(cont.) “Crop Insurance for Hay and Forage” - Dismukes, Zepp and Smith, ERS report on the RMA website (1996) “Crop Insurance Alternatives for Hay in South Dakota” - Diersen, SDSU ExEx 5044 (2002) “Noninsured Crop Disaster Assistance Program” - Johnson, AMPC Briefing No. 14 (2002)

  6. Potential Demand Factors • Yield variability • Presence of subsidy • Hay is valued input • Some revenue dependence

  7. NAPCoverage • Noninsured Crop Disaster Assistance Program • Administered by Farm Service Agency • Similar to CAT coverage • Deadline is December 1 • Coverage for pasture and grass hay

  8. Common Tendencies in 2002 • ¼ S.D. acres under CAT • ½ S. D. acres at 50% level • ¾ N.D. acres under CAT • ¼ M.N. acres under CAT • ¼ M.N. acres under GRP

  9. Shortcomings • Ignorance about availability • Record-keeping demands • Lack of quality provisions • Only yield products offered

  10. Product Refinements • Can the DOT weigh bales? • Is there a place for GRP? • Is a revenue product feasible? • Quality seems distributed like wheat’s • Current yield and price are correlated • Do WE just need to get the word out?

  11. Summary • Customer base is slowly changing • Current products may not match needs • NAP may be viable alternative • YOUR input will likely bring change

  12. For More Information • diersen.matthew@ces.sdstate.edu • Phone: (605) 688-4864 • http://sdces.sdstate.edu/ • Click on the “Markets” tab • Scroll to ExEx 5044 • AMPC website

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