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The Federal Crop Insurance Program - An Empirical Analysis Of Regional Differences In Acreage Response And Participation

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  • Goodwin, Barry K.
  • Vandeveer, Monte
  • Deal, John

Abstract

The extent to which crop insurance programs have resulted in additional land being brought into production has been a topic of considerable debate. We extend a multi-equation structural model of crop acreage response, insurance participation, CRP enrollment, and input usage developed in Goodwin and Vandeveer (2000) to wheat and barley production in the "Northern Great Plains" region. We also update earlier results for corn and soybean production in the "Heartland" region. Our results confirm earlier findings that increased participation in insurance programs provoke a statistically significant acreage response. This response is, however, relatively modest. We find that cross-the-board decreases of 50% in insurance premiums significantly increase participation but result in acreage increases of about 0.5% for barley and 3.7% for wheat. In the modern period (1997-1998),expanded insurance participation brought about by premium rate reductions has almost no effect on acreage. Our results for the recent period show a shifting in coverage toward revenue insurance.

Suggested Citation

  • Goodwin, Barry K. & Vandeveer, Monte & Deal, John, 2001. "The Federal Crop Insurance Program - An Empirical Analysis Of Regional Differences In Acreage Response And Participation," 2001 Annual meeting, August 5-8, Chicago, IL 20579, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea01:20579
    DOI: 10.22004/ag.econ.20579
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    References listed on IDEAS

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    1. Richard E. Just & Linda Calvin & John Quiggin, 1999. "Adverse Selection in Crop Insurance: Actuarial and Asymmetric Information Incentives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 834-849.
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    3. Smith, Vincent H. & Goodwin, Barry K., 2003. "An Ex Post Evaluation of the Conservation Reserve, Federal Crop Insurance, and Other Government Programs: Program Participation and Soil Erosion," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-16, August.
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    7. Goodwin, Barry K., 1994. "Premium Rate Determination In The Federal Crop Insurance Program: What Do Averages Have To Say About Risk?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(2), pages 1-14, December.
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    Cited by:

    1. Olson, Stacey & Little, Bertis B. & Lovell, Ashley C., 2003. "Using Data Mining To Detect Anomalous Producer Behavior: An Analysis Of Soybean Production And The Federal Crop Insurance Program," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35223, Southern Agricultural Economics Association.
    2. Kanakasabai, Murali & Dillon, Carl R. & Skees, Jerry R., 2001. "Microeconomic Evaluation Of Farm Risk Management Decisions In Kentucky," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36178, Western Agricultural Economics Association.
    3. Funing Zhong, 2007. "Crop Insurance and Agrochemical Use in the Manasi Watershed, Xinjiang, China," EEPSEA Research Report rr2007071, Economy and Environment Program for Southeast Asia (EEPSEA), revised Jul 2007.
    4. Funing Zhong & Manxiu Ning & Li Xing, 2007. "Does crop insurance influence agrochemical uses under current Chinese situations? A case study in the Manasi watershed, Xinjiang," Agricultural Economics, International Association of Agricultural Economists, vol. 36(1), pages 103-112, January.

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