Livestock Enterprises and Nonfarm Income
The undertaking of both livestock and crop
production, and the reliance on off-farm income
by the farmer and/or spouse represent
forms of diversification that would be expected
to contribute to the stability of overall income
and, thus, reduce the demand for crop insurance.
Conversely, if a significant portion of
the crop production is intended for feed, the
motivation to use insurance to protect against
yield/feed shortfalls may be greater.
Survey Results
Insurance usage rates indicated by the respondents
are reported in table 1 by crop (corn and
soybeans) and insurance product. In each case,
survey respondents who indicated they did or
did not intend to buy crop insurance in 2001
are classified as users and nonusers, respectively.
2 The levels of insurance use are nearly
the same for the two crops, and are consistent
with farmers’ actual participation rates on a national
basis. Overall use rates are 73.3% and
75.6% for soybeans and corn, respectively.3
The reported participation rates by product for
corn are 9.8% for hail insurance only, 35.7%
for yield insurance, and 50.8% for revenue insurance.
The rates for soybeans are 16.2% for
hail only, 38.9% for yield insurance, and 38.3%
for revenue insurance. The high cross tabulations
indicate that producers who insure one
crop are likely to insure the other crop, and
that producers tend to use the same type of
insurance on both crops.
Table 2 reports mean values of farm characteristics
categorized by nonuser versus user
of crop insurance and by the hail, yield, and
revenue insurance categories (only corn data
are reported; the soybean data are very similar).
The averages of farm size, debt use and
leverage, leasing of land, self-assessed probability
of receiving yield indemnities, and number
of landlords of crop insurance users exceed
those of nonusers. Among the insurance
products, average values of farm size, debt
use, and leverage, and intended expansion of
insurance use are highest for crop revenue
insurance users and lowest for those using hail