Income insurance as a tool for the stabilization of farm income: An application in the Spanish olive oil sector

María Bielza Díaz-Caneja, Alberto Garrido Colmenero, José M. Sumpsi Viñas


This paper analises a set of revenue stabilisation policies for Spanish olive oil growers, including yield and revenue insurance schemes. In theory and under certain assumptions, revenue insurance provides cheaper revenue stabilisation than a combination of price and yield insurance. After reviewing several revenue insurance experiences, an application is developed to compare various policies that include the actual production aid, tree aid, yield insurance and revenue insurance. The comparison is made taking into account the efficacy of public expenditure’s efficiency and the risk reduction potential. Results do not back the assertion that a revenue insurance scheme would be a superior policy than the current policy, that includes a production aid and yield insurance. It is shown that revenue insurance requires less reinsurance protection than yield insurance, making it cheaper on relative terms. Lastly, the analyses at provincial level show that the results of each studied policy are sharply different based on the risks and productivity that characterise each province.


agricultural insurance; revenue insurance; agricultural policy

Subject classification

Q18, Q10.

Full Text:



Antle, J.M. (1987). "Econometric Estimation of Producers' Risk Attitudes" - Amer. J. Agr.Econ. 69: 509-22.

Arrow, K.J. (1971). "Essays in the Theory of Risk Bearing" - Amsterdam: North Holland.

Babcock, B.A. y Hennessy, D.A. (1996). "Input Demand under Yield and Revenue Insurance." - Amer. J. Agr. Econ. 78: 416-427.

Bielza, M. (2002). "El Fondo de Compensación de la Patata de Álava" - Document submitted for publication to Vida Rural.

Binswanger, H.P. (1980). "Attitudes Towards Risk: Experimental Measurement in Rural India" - Amer.J. Agr. Econ. 62: 395-407.

Calkins, P.; Romain, R.; Maïga, A. y Lambert, R. (1997). "Comparaisons de divers types de programmes de stabilisation des revenus agricoles du Québec" - Can. J. Agr. Econ. 45(1): 51-68.

Coble, K.H.; Heifner, R.G. y Zuniga, M. (2000). "Implications of Crop Yield and Revenue Insurance for Producer Hedging" - Journal of Agricultural and Resource Economics 25 (2):432-452.

Commission, E. (2001). "Risk Management Tools for EU Agriculture (with a special focus on insurance)" - Working Document. Agriculture Directorate-General.

European_Economy (1999). "Income insurance in Europen agriculture" - in European Economy. European Commission. Directorate-general for economic and financial affairs. Reports and Studies.

Goodwin, B. y Ker, A. (1998). "Revenue Insurance: A New Dimension in Risk Management" - Choices 13: 24-27.

Hamal, K.B. y Anderson, J.R. (1982). "A Note on Decreasing Absolute Risk Aversion Among Farmers in Nepal" - Austral. J. Agr. Econ. 26: 20-25.

Hennessy, D.A.; Babcock, B.A. y Hayes., D.J. (1997). "Budgetary and Producer Welfare Effects of Revenue Insurance." - Amer. J. Agr. Econ. 79: 1024-1034.

Johnson, M.E. y Tenenbein, A. (1981). "A Bivariate Distribution Family with Specified Marginals." - J. Amer. Statist. Assoc. 76 :198-201.

Little, I.M.D. y Mirrlees, J.A. (1974). "Project Appraisal and Planning for Developing Countries" - London: Heinemann.

Meuwissen, M.P.M.; Huirne, R.B.M. y Hardaker, J.B. (1999). "Income insurance in Europen agriculture" - in European Economy. European Commission. Directorate-general for economic and financial affairs. Reports and Studies.

Mili, S. (1996). "Organización de Mercados y Estrategias Empresariales en el Subsector del Aceite de Oliva" - Serie Estudios del MAPA 114.

Miller, S.E.; Kahl, K.H. y Rathwell, P.J. (2000). "Revenue Insurance for Georgia and South Carolina Peaches" - Journal of Agricultural and Applied Economics 32 (1): 123-132.

Miranda, M.J. y Glauber, J.W. (1997). "Systemic Risk, Reinsurance, and the Failure of Crop Insurance Markets" - Amer. J. Agr. Econ. 79: 206-15.

Nicholson, W. (1997). "Teoría Microeconómica: Principios básicos y aplicaciones." - McGraw-Hill.

Skees, J.R. (1999). "Policy implications of income insurance: Lessons learned from the US and Canada" - IX European Congress of Agricultural Economists. Organized Session Papers.

Sumpsi, J.M.; Garrido, A.; Bielza, M.; Ambrosio, L. y Iglesias, L. (2001). "Viabilidad económica y financiera de un seguro de ingresos agrarios en España." - Departamento de Economía y Ciencias Sociales Agrarias. Universidad Politécnica de Madrid.

Turvey, C.G. (1992 a). "An Economic Analysis of Alternative Farm Revenue Insurance Policies." - Can. J. Agr. Econ. 40: 403-426.

Wu, J. y Adams, R.M. (2001). "Production Risk, Acreage Decisions and Implications for Revenue Insurance Programs" - Canadian Journal of Agricultural Economics 49: 19-35.

Abstract Views

Metrics Loading ...

Metrics powered by PLOS ALM


  • There are currently no refbacks.

 Universitat Politècnica de València

e-ISSN: 2174-7350   ISSN: 1578-0732