An examination of the role of price insurance products in stimulating investment in agriculture supply chains for sustained productivity



Assa, Hirbod, Sharifi, Hossein ORCID: 0000-0002-8948-1036 and Lyons, Andrew ORCID: 0000-0003-3105-1567
(2021) An examination of the role of price insurance products in stimulating investment in agriculture supply chains for sustained productivity. European Journal of Operational Research, 288 (3). 918 - 934.

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Abstract

This study examines how managing risk by introducing commodity price insurances may improve the likelihood of increased investment in agri-food supply chains. A model is introduced which shows how insurance products on index prices can reduce the uncertainty of the impact of investment, and also how lower investment can generate the same impact as a higher investment. To show our results, we use two different frameworks which include total profit (Pareto optimal) and Stackelberg game setups. The results demonstrate that in both frameworks the investment will have a greater impact when an insurance product is present. By implication, the study presents an encouraging message to the insurance industry to introduce products to secure supply chain actors’ revenue leading to an increase in investment rate. Consequently, the study offers insight into how the role of traditional government subsidies for protecting farmers, particularly the small to medium-sized farms, may be revisited by replacing some of the existing subsidisation policies with revenue insurance.

Item Type: Article
Uncontrolled Keywords: Small to medium farms, Commodity price insurances, Agri-food supply chains, Investment in farming
Depositing User: Symplectic Admin
Date Deposited: 22 Jun 2020 08:14
Last Modified: 03 Mar 2021 09:30
DOI: 10.1016/j.ejor.2020.06.030
Related URLs:
URI: https://livrepository.liverpool.ac.uk/id/eprint/3091319