IDEAS home Printed from https://ideas.repec.org/p/ags/aiea14/173108.html
   My bibliography  Save this paper

A Multi-Region Approach to Assessing Fiscal and Farm Level Consequences of Government Support for Farm Risk Management

Author

Listed:
  • Cooper, Joseph
  • Delbecq, Benoit

Abstract

The 2014 U.S. Farm Act passed into law in early February, 2014, after approximately three years of hearings. Much debate in the negotiations leading to this Farm Act focused on new programs for providing producers with support payments covering “shallow losses” in revenue. We develop an approach to examine the sensitivity of the farmer’s downside risk protection to marginal changes in the deductible in shallow loss program scenarios. The copula approach we use simultaneously considers price and yield correlation across all U.S. counties producing several major field crops. We find that average payments under the shallow loss program scenarios are elastic with respect to the program’s payment coverage rate. To empirically assess where shallow loss is likely to most benefit producers, we map at the county level the ratios of expected shallow loss payments to crop insurance premiums for corn, soybeans, cotton, and winter wheat. As tail dependencies among individual crop yield densities may vary spatially, we propose a method for grouping counties in a t-copula that allows for heterogeneity in tail dependencies.

Suggested Citation

  • Cooper, Joseph & Delbecq, Benoit, 2014. "A Multi-Region Approach to Assessing Fiscal and Farm Level Consequences of Government Support for Farm Risk Management," 2014 Third Congress, June 25-27, 2014, Alghero, Italy 173108, Italian Association of Agricultural and Applied Economics (AIEAA).
  • Handle: RePEc:ags:aiea14:173108
    DOI: 10.22004/ag.econ.173108
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/173108/files/A%20Multi-Region%20Approach%20to%20Assessing%20Fiscal%20and%20Farm%20Level%20Consequences%20of%20Government%20Support%20for%20Farm%20Risk%20Management_%20Cooper%20J_%20Delbecq%20B.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.173108?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Schnitkey, Gary, 2012. "Crop Insurance in 2012," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 2, July.
    2. Effland, Anne & Cooper, Joseph & O'Donoghue, Erik, 2014. "2014 Farm Act Shifts Crop Commodity Programs Away From Fixed Payments and Expands Program Choices," Amber Waves:The Economics of Food, Farming, Natural Resources, and Rural America, United States Department of Agriculture, Economic Research Service, issue 06, pages 1-1, July.
    3. 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.
    4. Carlo Cafiero & Fabian Capitanio & Antonio Cioffi & Adele Coppola, 2007. "Risk and Crisis Management in the Reformed European Agricultural Policy," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 55(4), pages 419-441, December.
    5. Joseph C. Cooper, 2010. "Average Crop Revenue Election: A Revenue-Based Alternative to Price-Based Commodity Payment Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1214-1228.
    6. Heimlich, Ralph E., 2000. "Farm Resource Regions," Agricultural Information Bulletins 33625, United States Department of Agriculture, Economic Research Service.
    7. Barry K. Goodwin, 2009. "Payment Limitations and Acreage Decisions under Risk Aversion: A Simulation Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 19-41.
    8. Bouye, Eric & Durlleman, Valdo & Nikeghbali, Ashkan & Riboulet, Gaël & Roncalli, Thierry, 2000. "Copulas for finance," MPRA Paper 37359, University Library of Munich, Germany.
    9. Barry J. Barnett & Dmitry V. Vedenov, 2007. "Is There a Viable Market for Area-Based Crop Insurance?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 508-519.
    10. Arriola, Christine & Dismukes, Robert & Coble, Keith H. & Ubilava, David & Cooper, Joseph C., 2011. "Alternatives to a State-Based ACRE Program: Expected Payments Under a National, Crop District, or County Base," Economic Research Report 262235, United States Department of Agriculture, Economic Research Service.
    11. John S. Lapp & Vincent H. Smith, 1992. "Aggregate Sources of Relative Price Variability Among Agricultural Commodities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(1), pages 1-9.
    12. Barry K. Goodwin & Alan P. Ker, 1998. "Nonparametric Estimation of Crop Yield Distributions: Implications for Rating Group-Risk Crop Insurance Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 139-153.
    13. Joseph Cooper & Carl Zulauf & Michael Langemeier & Gary Schnitkey, 2012. "Implications of within county yield heterogeneity for modeling crop insurance premiums," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 134-155, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hungerford, Ashley & O'Donoghue, Erik, 2016. "Federal Crop Insurance Options for Upland Cotton Farmers and Their Revenue Effects," Economic Research Report 249774, United States Department of Agriculture, Economic Research Service.
    2. Cooper, Joseph & Hungerford, Ashley & O'Donoghue, Erik, 2015. "Interactions of Shallow Loss Support and Traditional Federal Crop Insurance: Building a Framework for Assessing Commodity Support Issues for the Next Farm Act," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205310, Agricultural and Applied Economics Association.
    3. Motamed, Mesbah & Hungerford, Ashley & Rosch, Stephanie & O’Donoghue, Erik & MacLachlan, Matthew & Astill, Gregory & Cessna, Jerry & Joseph Cooper, 2018. "Federal Risk Management Tools for Agricultural Producers: An Overview," Economic Research Report 276229, United States Department of Agriculture, Economic Research Service.
    4. Eric J Belasco & Joseph Cooper & Vincent H Smith, 2020. "The Development of a Weather‐based Crop Disaster Program," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 240-258, January.
    5. 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.
    6. Hungerford, Ashley & Astill, Gregory & Effland, Anne, 2017. "Changes to the Noninsured Crop Disaster Assistance Program Under the Agricultural Act of 2014: Their Potential Risk Reduction Impacts," Economic Information Bulletin 262132, United States Department of Agriculture, Economic Research Service.
    7. Santeramo, Fabio Gaetano & Maccarone, Irene, 2022. "Analisi storica delle rese agricole e la variabilità del clima: Analisi dei dati italiani sui cereali [Historical crop yields and climate variability: analysis of Italian cereal data]," MPRA Paper 114135, University Library of Munich, Germany, revised 04 Aug 2022.

    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. Cooper, Joseph & Hungerford, Ashley & O'Donoghue, Erik, 2015. "Interactions of Shallow Loss Support and Traditional Federal Crop Insurance: Building a Framework for Assessing Commodity Support Issues for the Next Farm Act," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205310, Agricultural and Applied Economics Association.
    2. Cooper, Joseph C. & Delbecq, Benoit A. & Davis, Christopher G., 2012. "Fiscal and Farm Level Consequences of “Shallow Loss” Commodity Support," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124199, Agricultural and Applied Economics Association.
    3. Gerlt, Scott & Thompson, Wyatt & Miller, Douglas, 2014. "Exploiting the Relationship between Farm-Level Yields and County-Level Yields for Applied Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-18.
    4. Liu, Y. & Ker, A., 2018. "Is There Too Much History in Historical Yield Data," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277293, International Association of Agricultural Economists.
    5. Gerlt, Scott & Westhoff, Patrick, 2013. "Analysis of the Supplemental Coverage Option," 2013 AAEA: Crop Insurance and the Farm Bill Symposium 156704, Agricultural and Applied Economics Association.
    6. Cooper, Joseph C., 2009. "ACRE: A Revenue-Based Alternative to Price-Based Commodity Payment Programs," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49180, Agricultural and Applied Economics Association.
    7. Gerlt, Scott & Westhoff, Patrick, "undated". "Comparison of County ARC and SCO," 2014 AAEA: Crop Insurance and the 2014 Farm Bill Symposium: Implementing Change in U.S. Agricultural Policy, October 8-9, 2014, Louisville, KY 184289, Agricultural and Applied Economics Association.
    8. Joseph Cooper & Carl Zulauf & Michael Langemeier & Gary Schnitkey, 2012. "Implications of within county yield heterogeneity for modeling crop insurance premiums," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 134-155, May.
    9. Cooper, Joseph C., 2008. "A Revenue-Based Alternative to the Counter-Cyclical Payment Program," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6197, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Cooper, Joseph C., 2009. "Payments under the Average Crop Revenue Program: Implications for Government Costs and Producer Preferences," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(1), pages 1-16, April.
    11. Xuche Gong & David A. Hennessy & Hongli Feng, 2023. "Systemic risk, relative subsidy rates, and area yield insurance choice," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(3), pages 888-913, May.
    12. Jesse B. Tack & David Ubilava, 2015. "Climate and agricultural risk: measuring the effect of ENSO on U.S. crop insurance," Agricultural Economics, International Association of Agricultural Economists, vol. 46(2), pages 245-257, March.
    13. Cooper, Joseph C. & Langemeier, Michael R. & Schnitkey, Gary D. & Zulauf, Carl R., 2009. "Constructing Farm Level Yield Densities from Aggregated Data: Analysis and Comparison of Approaches," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49216, Agricultural and Applied Economics Association.
    14. Zulauf, Carl R. & Orden, David, 2014. "Assessing the Political Economy of the 2014 U.S. Farm Bill," 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California 197160, International Agricultural Trade Research Consortium.
    15. Porth, Lysa & Tan, Ken Seng & Zhu, Wenjun, 2016. "A Relational Model for Predicting Farm-Level Crop Yield Distributions in the Absence of Farm-Level Data," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236278, Agricultural and Applied Economics Association.
    16. Mane, Ranjitsinh & Watkins, Bradley, 2018. "Stochastic Analysis of County and Multi County Yields for Agriculture Risk Coverage (ARC) payments for Arkansas Row Crop Producers," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266698, Southern Agricultural Economics Association.
    17. Eric J Belasco & Joseph Cooper & Vincent H Smith, 2020. "The Development of a Weather‐based Crop Disaster Program," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 240-258, January.
    18. David Orden & Carl Zulauf, 2015. "Political Economy of the 2014 Farm Bill," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1298-1311.
    19. Yong Liu & Alan P. Ker, 2021. "Simultaneous borrowing of information across space and time for pricing insurance contracts: An application to rating crop insurance policies," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(1), pages 231-257, March.
    20. Severini, Simone & Tantari, Antonella & Di Tommaso, Giuliano, 2016. "The instability of farm income. Empirical evidences on aggregation bias and heterogeneity among farm groups," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(1), pages 1-19, April.

    More about this item

    Keywords

    Agricultural and Food Policy; Demand and Price Analysis; Research and Development/Tech Change/Emerging Technologies;
    All these keywords.

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:aiea14:173108. 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/aieaaea.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.