Farm Policy Support Payments and Risk Balancing Phenomenon in Grain and Oilseed Sector in Ontario, Canada

Rakhal Sarker

No 344398, IAAE 2024 Conference, August 2-7, 2024, New Delhi, India from International Association of Agricultural Economists (IAAE)

Abstract: Canada has developed a multi-layered whole farm-based support program in the new Millennium. Support payments received by farmers, however, can alter their investment portfolio and contribute to risk-balancing behaviour. Does risk-balancing exist in Ontario agriculture? This question is addressed in this paper using microdata data for the grain and oilseed sector in Ontario. Our empirical results revealed that support payments received during the study period reduced business risk for small and medium farms, but not for large grain and oilseed farms in Ontario. While the results from correlation analysis revealed that all grain and oilseed farms in Ontario are significant risk-balancers, the results from the fixed effect panel regression analysis demonstrate that there is evidence of risk-balancing for the medium grain and oilseed farms in Ontario during the study period. The results also reveal that the presence of risk-balancing does not pose any problem for future growth of this sector or the long-term sustainability of farm support programs.

Keywords: Agricultural and Food Policy; Agricultural Finance; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 37
Date: 2024-07-26
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cfcp15:344398

DOI: 10.22004/ag.econ.344398

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