Factors influencing the purchase of cotton and rice crop insurance

A key aspect of crop insurance is ensuring that the policies will match criteria on which producers choose whether or not to purchase crop insurance. The purpose of this study is to determine the decision factors for cotton and rice insurance purchasers in the Mississippi Delta. A survey was conducted of cotton and rice insurance users in the area. Questions included such things as demographics, education and risk characteristics and attitudes. Logit analysis was used to determine what factors for both cotton and rice where significant in the purchase of crop insurance versus no insurance, as well as yield and revenue insurance. The most common decision factors found in the analysis were producer experience and the producer's average yield relative to the county average yield. Possible ways to improve crop insurance participation include introducing cost of producer insurance and reducing crop insurance fraud.