Supply and Effects of Specialty Crop Insurance
AbstractThe federal government has developed a large number of programs to insure various “specialty crops” over the last two decades; a given program is peculiar to a particular county and crop. This development has been particularly notable in California, because of its size and the diversity of crops produced there. If the extension of federal crop insurance programs to cover fruit and vegetable production has affected either producer or consumer welfare, then we would expect to see this reflected in output and prices. Exploiting variation in the timing of program introduction in different locations for different crops to estimate the effect of crop insurance on the output and prices of the insured crops. We ﬁnd that the supply of and demand for insurance for tree crops is much larger than for non-tree crops. Crop insurance has a small but signiﬁcant negative effect on prices of insured crops. This last ﬁnding is consistent with the view that demand for such highly disaggregated commodities is likely to be highly elastic. A consequence is that crop insurance for these specialty crops has little benefit for consumers, even when it generates a large supply response.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16709.
Date of creation: Jan 2011
Date of revision:
Publication status: published as Ethan Ligon. "Supply and Effects of Specialty Crop Insurance," in Joshua S. Graff Zivin and Jeffrey M. Perloff, editors, "The Intended and Unintended Effects of U.S. Agricultural and Biotechnology Policies" University of Chicago Press (2012)
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Other versions of this item:
- D2 - Microeconomics - - Production and Organizations
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-01-30 (Agricultural Economics)
- NEP-ALL-2011-01-30 (All new papers)
- NEP-IAS-2011-01-30 (Insurance Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Erik J. O'Donoghue & Michael J. Roberts & Nigel Key, 2009. "Did the Federal Crop Insurance Reform Act Alter Farm Enterprise Diversification?," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 80-104.
- Belasco, Eric & Galinato, Suzette & Marsh, Tom & Miles, Carol & Wallace, Russell, 2013. "High Tunnels Are My Crop Insurance: An Assessment of Risk Management Tools for Small-scale Specialty Crop Producers," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(2), August.
- Olen, Beau & Wu, Junjie, 2013. "Supply of Insurance for Specialty Crops and its Effect on Yield and Acreage," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150787, Agricultural and Applied Economics Association.
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