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How U.S. Farm Programs and Crop Revenue Insurance Affect Returns to Farm Land

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  • Allan W. Gray
  • Michael D. Boehlje
  • Brent A. Gloy
  • Stephen P. Slinsky

Abstract

A simulation model incorporating price and yield variability is used to examine the impact of government farm program and crop revenue coverage (CRC) insurance payments on the probability distribution of returns to land. Results indicate that Marketing Loan Program payments have the greatest impact on both the mean and standard deviation of returns. Agricultural Market Transition Act payments shift the distribution of returns without changing the variability, creating a reduction in relative risk. Market loss assistance payments increase the mean, reduce variability, and increase skewness. When combined, farm programs substantially increase the value that risk-averse producers place on the residual returns to land and substantially reduce the certainty equivalent value of CRC. Copyright 2004, Oxford University Press.

Suggested Citation

  • Allan W. Gray & Michael D. Boehlje & Brent A. Gloy & Stephen P. Slinsky, 2004. "How U.S. Farm Programs and Crop Revenue Insurance Affect Returns to Farm Land," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(2), pages 238-253.
    • Handle: RePEc:oup:revage:v:26:y:2004:i:2:p:238-253
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    File URL: http://hdl.handle.net/10.1111/j.1467-9353.2004.00173.x
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    Cited by:

    1. Antoine Leblois & Philippe Quirion & Agali Alhassane & Seydou Traoré, 2014. "Weather Index Drought Insurance: An Ex Ante Evaluation for Millet Growers in Niger," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(4), pages 527-551, April.
    2. Claassen, Roger & Cooper, Joseph C. & Carriazo, Fernando, 2011. "Crop Insurance, Disaster Payments, and Land Use Change: The Effect of Sodsaver on Incentives for Grassland Conversion," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(2), pages 195-211, May.
    3. 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.
    4. repec:isu:genstf:201001010800002848 is not listed on IDEAS
    5. Antoine Leblois & Philippe Quirion & Benjamin Sultan, 2013. "Price vs. weather shock hedging for cash crops: ex ante evaluation for cotton producers in Cameroon," CIRED Working Papers hal-00796528, HAL.
    6. Anton, Jesus & Giner, Celine, 2005. "Can Risk Reducing Policies Reduce Farmer's Risk and Improve Their Welfare?," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24578, European Association of Agricultural Economists.
    7. Jean Cavailhès & Mohamed Hilal & Pierre Wavresky, 2011. "Urban influence of farmland prices and its impact on agriculture [L'influence urbaine sur le prix des terres agricoles et ses conséquences pour l'agriculture]," Post-Print hal-02645617, HAL.
    8. Park, Jiyun & Kim, Chang-gil, . "An Economic Effect Of The Crop Insurance At The Farmland In Korea," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 40(Special, ).
    9. Anton, Jesus & Kimura, Shingo, 2009. "Farm Level Analysis of Risk, and Risk Management Strategies and Policies: Evidence from German Crop Farms," 2009 Conference, August 16-22, 2009, Beijing, China 51729, International Association of Agricultural Economists.
    10. Jean Cavailhès & Mohamed Hilal & Pierre Wavresky, 2011. "L’influence urbaine sur le prix des terres agricoles et ses conséquences pour l’agriculture," Économie et Statistique, Programme National Persée, vol. 444(1), pages 99-125.
    11. Davis, Todd D. & Anderson, John D. & Young, Robert E., 2013. "Evaluating the Interaction between Farm Programs with Crop Insurance and Producers' Risk Preferences," 2013 AAEA: Crop Insurance and the Farm Bill Symposium 156753, Agricultural and Applied Economics Association.

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