A Technical Manual for Stochastic Simulation of Crop Yield, Price, and Policy Outcomes

This report presents a stochastic simulation model for analyzing crop yield risk, price risk, and policy outcomes under uncertainty. The model combines county-level historical yield data, flexible price information, copula-based dependence modeling, and insurance-based calibration to generate joint simulations of crop yields and prices. Yield distributions are constructed using detrending and kernel-based simulation, while price outcomes are simulated using flexible price inputs that can incorporate futures-based information, implied volatility, MYA prices, FSA projections, or other user-specified assumptions. A copula-based dependence module links yield and price outcomes across crops and regions, including high-dimensional county-level applications. The model also calibrates farm-level yield volatility using RMA Yield Protection data and applies simulated outcomes to evaluate crop insurance and farm safety net programs. This framework provides a flexible tool for assessing expected payments, downside risk, and distributional outcomes under alternative production and market conditions.