No abstract

Purpose -The purpose of this paper is to investigate the demand for crop insurance. Moreover, farmer willingness to pay (WTP) for crop insurance was derived. Factors affecting the demand were also examined in a country where crop insurance products are not currently available. Sensitivity analysis was conducted by studying the price-anchoring effect. Design/methodology/approach -Data from a choice experiment (CE) were analyzed with mixed logit models and the distribution of farmer WTP for crop insurance was derived. A split sample approach with varying premium vectors was used to analyze the price-anchoring effect. Findings -Demand was revealed for crop insurance products in Finland. The demand was higher among younger farmers and farms with more arable land. WTP for crop insurance products was very sensitive to the premium interval presented in the CE design.Research limitations/implications -The price-anchoring effect may disrupt the market development of crop insurance products, because insurance companies may take advantage of the lack of awareness among farmers of crop insurance pricing. Practical implications -The insurance product expected indemnity was a more important factor than the deductible in determining farmer WTP for crop insurance. Therefore, the 30 percent deductible level set for subsidized crop insurance products is not an obstacle for the development of such products in the EU. Originality/value -The study applied a well-known method (CE) to crop insurance in a country where these products are non-existent. The split sample approach was used to examine the price-anchoring effect on crop insurance.

This article explores long-term land improvement (lime application) under land tenure insecurity on leased land. The dynamic optimisation problem is solved by a stochastic dynamic programming routine with known parameters for one-period returns and transition equations. The model parameters represent Finnish soil quality and production conditions. The farmer's decision rules are solved for alternative likelihood scenarios over the continuation of the fixed term lease contract. The results suggest that, as the probability for non-renewal of the lease contract increases, farmers quickly decrease investments in irreversible land improvement and, thereafter, yields decline gradually. The estimated decision rules are a part of larger set of farmer's decision rules to be taken care when land leasing and environmental legislation is renewed.

Insurance premium subsidies and disaster relief payments are government actions that can help to smooth farmers' incomes between years. In the EU crop insurance based on public-private partnership is promoted. We present an analysis based on farmers' stated preferences with split data approach of crop insurance and disaster relief provided by the government. Results reveal that farmers' willingness to pay for crop insurance is conditional on the prospect for government disaster relief.

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In Finland, water conservation policy sets equal incentive regardless of the condition of the environment. Before any policy reform, it is vital to investigate landowners' tendency for adoption. In this study we were particularly interested in examining the tendency for adoption if the soil quality implies a high leaching risk or water quality is already poor. For this purpose, survey data were combined with GIS data. Furthermore the aim was to analyse the effect of farm and farmer characteristics and attitudes on adoption. The findings derived by probit models indicated that, for active farmers, financial variables were the key determinants. For passive owners, adoption was also explained by attitudes. Contrary to our expectations, there is no spontaneous tendency for water conservation in deteriorated areas. Targeted agri-environmental measures, even though costly, cannot be avoided.

This study estimates shadow prices for land parcel characteristics in Finland, such as size and distance from the compound, by adding these characteristics to the conditional profit maximisation model. The profit functions are production line-specific, and the endogenous choice of production line is controlled for by a switching-type Probit-model.The results suggest that the small parcel size and their long distances from the compound significantly affect the farmer choice of allocating most land either to grass or to grain. The endogenous choice of line of production also has significant statistical implications in relation to profits, output supplies and input demand. Small parcel size was found to increase costs significantly by hindering farmers from adopting the most efficient production technologies and practices.The ongoing rapid structural development in Finnish agriculture implies that the constraints imposed by small parcels of land are becoming more and more costly. Grassland farming is predicted to loose its comparative advantage in the most fragmented agricultural areas, as farm sizes increase further. Operations to re-structure parcels of land amongst a group of neighbouring farms, although often costly and time consuming, will generate high returns.

Land ownership fragmentation has resulted in the neglect of land improvement in many countries. This study aims to analyze whether this challenge could be resolved by a tax policy that encourages land sales. Using Finnish data, real estate tax and temporal relaxation on taxation of capital gains showed some potential for the restructuring of land ownership. Potential sellers who could not be revealed by traditional logit models were identified with the latent class approach. Those landowners with an intention to sell even without a policy change were sensitive to temporal relaxation in the taxation of capital gains. (JEL H21, Q15)