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Risk Reduction and the 2014 Farm Bill

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  • Hungerford, Ashley
  • O'Donoghue, Erik
  • Motamed, Mesbah

Abstract

The 2014 Agricultural Act introduced several risk management programs for commodities. Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) provide price and revenue protection, respectively, to eligible producers of covered commodities. Also in addition to existing federally-backed crop insurance policies, the Supplemental Coverage Option (SCO), a new program, provides subsidized add-on insurance coverage to producers of rice, cotton, corn, soybeans, sorghum, wheat, and spring barley. Through simulations of prices and yields, we examine the relationship between the support payments generated by these new programs and the magnitude of the risk reduction they produce, both under their current parameters as well as alternatives. The simulations also reveal the distribution of risk reduction among counties across the United States.

Suggested Citation

  • Hungerford, Ashley & O'Donoghue, Erik & Motamed, Mesbah, 2015. "Risk Reduction and the 2014 Farm Bill," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204845, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea15:204845
    DOI: 10.22004/ag.econ.204845
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    References listed on IDEAS

    as
    1. Keith H. Coble & Robert Dismukes, 2008. "Distributional and Risk Reduction Effects of Commodity Revenue Program Design ," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 543-553.
    2. Dismukes, Robert & Coble, Keith H., 2007. "Managing Risk With Revenue Insurance," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, pages 1-6, May.
    3. Cooper, Joseph & Delbecq, Benoît, 2014. "A multi-region approach to assessing fiscal and farm level consequences of government support for farm risk management," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 3(3), pages 1-23, December.
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    Keywords

    Agricultural and Food Policy; Risk and Uncertainty;

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