Does subsidized crop insurance affect farm industry structure? Lessons from the U.S

Azzeddine Azzam, Cory Walters () and Taylor Kaus

Journal of Policy Modeling, 2021, vol. 43, issue 6, 1167-1180

Abstract: Farm policies have unintended consequences and subsidized crop insurance is no different. We draw on the theory of long-run competitive equilibrium to estimate the effect of subsidized crop insurance on farm output and number of farms in the U.S. Results show that the subsidy led to fewer and larger farms. To the extent that larger farms benefit disproportionately from other farm subsidies, known to increase farm size, subsidized crop insurance can only contribute to further farm consolidation, with consequences for sustainability and depopulation of rural communities. These unintended effects could make the case for reverting to ad-hoc disaster payment programs.

Keywords: Crop insurance; Farm consolidation; Long-run competitive equilibrium (search for similar items in EconPapers)
JEL-codes: Q12 Q15 Q18 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:43:y:2021:i:6:p:1167-1180

DOI: 10.1016/j.jpolmod.2021.06.003

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