The Effect of Crop Insurance Premium Subsidies on Soybean Producers' Risk Management Portfolios

Ashley Hungerford and Stephanie Rosch

No 235341, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: We examine how reducing subsidies for federal crop insurance affects the risk management portfolios of US soybean producers. We apply the portfolio optimization approach of Das and Statman \citeyearpar{das2013options} to model how producers’ risk management portfolios change as subsidies for federal crop insurance premiums change, and examine how the changes to the risk management portfolios impact farmers’ on-farm income and exposure to downside risk. We optimize farmers’ risk management portfolio by adjusting the budget shares dedicated to each of four risk management tools: returns on production, forward contracting, savings, and crop insurance.

Keywords: Agricultural and Food Policy; Agricultural Finance; Farm Management; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 21
Date: 2016
New Economics Papers: this item is included in nep-agr, nep-ias and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:235341

DOI: 10.22004/ag.econ.235341

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