| Crop yield and revenue insurance products with coverage based on actual production history (APH) yields dominate the U.S. Federal Crop Insurance Program. The APH yield, which plays a critical role in determining the coverage offered to producers, is based on a small sample of historical yields for the insured unit. The properties of this yield measure are critical in determining the value of the insurance to producers. Sampling error in APH yields has the potential to lead to over-insurance in some years and under-insurance in other years. Premiums, which are in part determined by the ratio of the APH yield to the county reference yield, are also affected by variations in APH yields. Congress has enacted two measures, yield substitution and yield floors,... |
