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Effects of Price Insurance Programs on Supply Response: A Case Study of Corn Farmers in Quebec

Author

Listed:
  • Mosadegh Sedghy, Bahareh
  • Tamini, Lota Dabio
  • Lambert, Remy

Abstract

Aims: This study examines the supply response of corn in the province of Quebec. Study Design: A time series design is implemented. Place and Duration of Study: Our analysis covers the period from 1985 to 2013 and uses the data of corn production in the province of Quebec. Methodology: A generalised autoregressive conditional heteroskedasticity (GARCH) process is used to model output price expectations and its volatility. Results: We found that application of the Farm Income Stabilisation Insurance in Quebec neutralises the adverse effects of price volatilities on corn production and generates a market power for corn producers. The change in the producers' attitude towards risk is other implication of the insurance program. Conclusion: These results imply that implementation of the insurance program in the province of Quebec leads to an increase of corn production and consequently this increase in production can impose more compensation cost (paid by the insurance program) to governments.

Suggested Citation

  • Mosadegh Sedghy, Bahareh & Tamini, Lota Dabio & Lambert, Remy, 2018. "Effects of Price Insurance Programs on Supply Response: A Case Study of Corn Farmers in Quebec," MPRA Paper 93816, University Library of Munich, Germany, revised 30 Nov 2018.
    • Handle: RePEc:pra:mprapa:93816
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    File URL: https://mpra.ub.uni-muenchen.de/93816/4/MPRA_paper_93816.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mosadegh Sedghy, Bahareh & Tamini, Lota D. & Lambert, Remy, 2021. "Implications of the state assistance program in the province of Quebec: the case of lamb production," MPRA Paper 112162, University Library of Munich, Germany.

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    More about this item

    Keywords

    Keywords: Price volatility; GARCH; corn supply response; effective price; market price; ASRA.;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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