Coverage Level Substitution After the Elimination of Prevented Planting Buy-Up

Rwit Chakravorty, Francis Tsiboe and Hongxi Zhao

No 404357, 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association

Abstract: This paper examines whether and to what extent producers substitute higher coverage levels for the loss of targeted prevented planting (PP) buy-up protection. We focus on the effect of the 2018 elimination of the 10% PP buy-up option, which preceded the Expanding Access to Risk Protection (EARP) rule's that completed the elimination of the remaining PP buy-up option beginning with the 2027 commodity year. Using policy-level administrative data from the USDA Risk Management Agency covering 2013–2024, we implement a difference-in-differences framework with farm and commodity-by-year fixed effects, supplemented by entropy balancing to address pre-existing differences between farms that elected the 10% buy-up (treated) and those that used base coverage only (control). Our preferred specification, focusing on corn and soybeans where pre-treatment parallel trends hold most cleanly, estimates that treated farms increased coverage levels by approximately 0.04 percentage points on average relative to control farms. This aggregate estimate masks substantial heterogeneity: farms with more than 10 percentage points of room below the 85% coverage ceiling increased coverage by 0.45 percentage points, while farms already at or near the ceiling show no positive response. The dynamic response is gradual and concentrated in 2020, a year of historically severe prevented planting losses following the record 2019 PP season, consistent with deliberate risk management substitution. Heterogeneity-robust estimators (Sun-Abraham, Callaway-Sant’Anna) confirm a positive and significant treatment effect, with the Sun-Abraham interaction-weighted estimate of 0.43 percentage points reflecting the concentrated post-treatment response more accurately than the TWFE average. These findings suggest that coverage-level substitution occurs where mechanically possible but is insufficient to fully compensate for the loss of targeted PP protection for a large share of the program population.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 27
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea26:404357

DOI: 10.22004/ag.econ.404357

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