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This study reviews the current base yield calculation method for Korea’s crop insurance program and suggests improvement measures in order to raise the guaranteed yield and indemnities for participating farmers. We conducted various scenario analyses on rice, pear, and astringent persimmon grown in Jeollanam-do, which is the top ranked area for the crop insurance participation rate in Korea. We compared the current base yield, which is a simple five-year average yield, with several suggested base yields such as a seven-year or ten-year simple average yield, Olympic average yield, average yield excluding the lowest yield, regional average yield, and U.S. methods of “CUP” and “FLOOR.” The results show that the five-year CUP and five-year average excluding the lowest yield appear to be the best options in terms of base yield improvement. However, these options bring about insurance premium increase which leads to the government financial burden because the government subsidizes 50% of insurance premium for farmers. Therefore, the improvement measures suggested by this study need close cooperation with the finance authority. |
