IDEAS home Printed from https://ideas.repec.org/a/ags/joaaec/355560.html

Effects of the 2014 Farm Bill Policies on Cotton Production

Author

Listed:
  • Devadoss, Stephen
  • Luckstead, Jeff

Abstract

We develop a model for a representative risk-averse cotton farmer to analyze the impact of crop insurance policies (Revenue Protection [RP], Yield Protection, Stacked Income Protection Plan [STAX], and Supplemental Coverage Option [SCO]). The model is calibrated and numerically optimized to quantify the effects of different insurance policy combinations on input use (moral hazard), insurance coverage levels, premiums, and certainty equivalent. When the farmer elects only RP, the optimal coverage rate is 80%. Under RP and STAX, the optimal RP coverage rate is 70% and the STAX coverage rate is 90%. RP and STAX is the optimal policy combination based on certainty equivalents. The RP and SCO combination has the lowest impact of input use.

Suggested Citation

  • Devadoss, Stephen & Luckstead, Jeff, . "Effects of the 2014 Farm Bill Policies on Cotton Production," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 50(2).
    • Handle: RePEc:ags:joaaec:355560
    DOI: 10.22004/ag.econ.355560
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/355560/files/effects-of-the-2014-farm-bill-policies-on-cotton-production.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.355560?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Davis, Todd & Anderson, John A. & Smith, Nathan, 2014. "Evaluating the Impact of Proposed Farm Bill Programs with Crop Insurance for Southern Crops," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162409, Southern Agricultural Economics Association.
    2. Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Devadoss, Stephen & Luckstead, Jeff, "undated". "Production and Moral Hazard Effects of 2014 Cotton Farm Bill Policies," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266763, Southern Agricultural Economics Association.
    2. Brausmann, Alexandra & Bretschger, Lucas, 2018. "Economic development on a finite planet with stochastic soil degradation," European Economic Review, Elsevier, vol. 108(C), pages 1-19.
    3. repec:jaf:journl:v:14:y:2023:i:2:n:529 is not listed on IDEAS
    4. Boncinelli, Fabio & Bartolini, Fabio & Casini, Leonardo, 2018. "Structural factors of labour allocation for farm diversification activities," Land Use Policy, Elsevier, vol. 71(C), pages 204-212.
    5. Gatti, Nicolas & Cecil, Michael & Baylis, Kathy & Estes, Lyndon & Blekking, Jordan & Heckelei, Thomas & Vergopolan, Noemi & Evans, Tom, 2023. "Is closing the agricultural yield gap a “risky” endeavor?," Agricultural Systems, Elsevier, vol. 208(C).
    6. Haile, Mekbib G. & Kalkuhl, Matthias & Braun, Joachim von, 2013. "Inter-and intra-annual global crop acreage response to prices and price risk," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149695, Agricultural and Applied Economics Association.
    7. Jean-Philippe Boussemart & Walter Briec & Christophe Tavera, 2011. "More evidence on technological catching-up in the manufacturing sector," Applied Economics, Taylor & Francis Journals, vol. 43(18), pages 2321-2330.
    8. Moschini, GianCarlo & Myers, Robert J., 2002. "Testing for constant hedge ratios in commodity markets: a multivariate GARCH approach," Journal of Empirical Finance, Elsevier, vol. 9(5), pages 589-603, December.
    9. Annemie Maertens & A. V. Chari & David R. Just, 2014. "Why Farmers Sometimes Love Risks: Evidence from India," Economic Development and Cultural Change, University of Chicago Press, vol. 62(2), pages 239-274.
    10. Carlotta Penone & Elisa Giampietri & Samuele Trestini, 2021. "Hedging Effectiveness of Commodity Futures Contracts to Minimize Price Risk: Empirical Evidence from the Italian Field Crop Sector," Risks, MDPI, vol. 9(12), pages 1-14, December.
    11. Jesse Tack & David Ubilava, 2013. "The effect of El Niño Southern Oscillation on U.S. corn production and downside risk," Climatic Change, Springer, vol. 121(4), pages 689-700, December.
    12. Zhanwen Shi & Erbao Cao, 2020. "Contract farming problems and games under yield uncertainty," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1210-1238, October.
    13. Bokusheva, R. & Breustedt, G. & Heidelbach, O., . "Reducing asymmetric information by alternative crop insurance schemes – Testing risk reduction of individual and index-based contracts," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 42.
    14. Kourtis, Apostolos & Markellos, Raphael N. & Psychoyios, Dimitris, 2012. "Wine price risk management: International diversification and derivative instruments," International Review of Financial Analysis, Elsevier, vol. 22(C), pages 30-37.
    15. Lagerkvist, Carl Johan, 2005. "Assessing farmers' risk attitudes based on economic, social, personal, and environmental sources of risk: evidence from Sweden," 2005 Annual meeting, July 24-27, Providence, RI 19361, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Thorsten Janus, 2020. "Terms of trade volatility, exports, and GDP," Economic Change and Restructuring, Springer, vol. 53(1), pages 25-38, February.
    17. Femenia, Fabienne, 2010. "Impacts of Stockholding Behaviour on Agricultural Market Volatility: A Dynamic Computable General Equilibrium Approach," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 59(3).
    18. Nyassoke Titi Gaston Clément & Jules Sadefo-Kamdem & Louis Aimé Fono, 2019. "Dynamic Optimal Hedge Ratio Design when Price and Production are stochastic with Jump," Working Papers hal-02417401, HAL.
    19. van Mellor, Thuy & Alexander, Corinne E. & Bledsoe, Larry & Krupke, Christian, 2006. "An Economic Analysis of Control of the Western Corn Rootworm Variant across Indiana," 2006 Annual meeting, July 23-26, Long Beach, CA 21264, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. McCarthy, Nancy & Carletto, Calogero & Davis, Benjamin & Maltsoglou, Irini, "undated". "Assessing the impact of massive out-migration on agriculture," ESA Working Papers 289053, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    21. Francisco Rosas & Mariana Sans, 2023. "Quantifying the value to the farmer from adopting climate risk-reducing technologies," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(6), pages 1-18, August.

    More about this item

    Keywords

    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:joaaec:355560. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.