In the paper the impact of yield insurance on farm net income and revenue volatility were investigated. The analyses were based on expected value-variance approach. In the first phase of the study a stochastic simulation was conducted in order to compute means and variances of revenues assuming scenario with and without insurance scheme. In the second phase, results obtained in the first step were incorporated into whole-farm non-linear programming model which optimized structure of crop production. The results indicate that under present legal regulations yield insurance schemes are not very attractive method of risk reduction from farmer's point of view. The main problem seems to be too high insurance premium in comparison to its level accepted by farmers. Moreover, attractiveness of insurance schemes seems to be reduced by direct payments system due to its positive impact on income stabilization.
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