The Role of area-yield crop insurance program face to the Mid-term Review of Common Agricultural Policy

mid-term review of Common Agricultural Policy. This mathematical programming
model will be reformulated to introduce the area-yield crop insurance program.

3 - Data and Information

The main information source for the development of this mathematical programming
model was obtained through interviews to a set of farmers in the Alentejo dryland region.
These interviews, besides they intended to determine the attitudes face to the farmers’
risk, allowed collecting farm data to develop this mathematical programming model. The
determination of the farmers’ individual preferences, through the application of a
questionnaire, allowed collecting data to apply the Cumulative Prospect Theory including
the area-yield crop insurance program. The development of an optimization model is
extraordinarily demanding in tems of data. The data and other information can be
collected from studies and research works, Government agencies and European Union. A
lot of information was collected in contacts with researchers and technicians in crop and
livestock production. To the similarity of the accomplished work Carvalho (1999), Lucas
(1995), Marques (1988) and Serrao (1988), it was necessary to get information about the
climatic conditions to define the states of nature and to obtain the occurrence
probabilities of each one of them. It was defined a set of crop activities (contained in
rotations) and livestock (beef cattle and sheep), whose costs were estimated in agreement
with the methodology of the Farming Accounting Data. The soils were divided in three
categories according to its productivity. Three technologies of beef cattle production and
two technologies of sheep production were considered. The agricultural year is divided
in five periods of animal feeding, that they are related with the annual distribution of the

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