Effect of Agricultural Crop Insurance on the Optimal Cropping Pattern in Mazandaran Province (Application of Conditional Value at Risk Model)

Risk in agricultural activity has been more visible because of its dependence on the environmental factors. One types of risk is crop yield risk. Given that insurance is one of the ways to deal with such risks, so in this study, has been tried to examine the effect of crop insurance and lack of it on cropping pattern in Mazandaran province. For this purpose, Conditional Value at Risk (CVaR) approach has been used in the form of Mixed Integer Mathematical Programming. Also the results of mentioned model were compared with the results of a risky model such as MOTAD to show the superiority of CVaR. Data used are based on the crop year 2010-2011 and GAMS software was used to estimate the results. The CVaR estimation results indicate that lack of crop insurance will cause to cultivate paddy rice and soybeans in the Mazandaran province but in terms of crop insurance, cultivate and insurance of corn is added to paddy rice and soybeans. The comparison of the semi-variance to actual returns ratio in MOTAD model than the CVaR model shows this index is higher in MOTAD model. Based on this result, is emphasize the use of CVaR model in the estimation of risky cropping pattern. Finally, the results show that expected profit in terms of crop insurance is more than lack of insurance that it could be effective in persuading farmers to adopt the insurance and proposed cropping pattern.