A Multi-Region Approach to Assessing Fiscal and Farm Level Consequences of Government Support for Farm Risk Management

Joseph Cooper (joseph.cooper0@gmail.com) and Benoit Delbecq

No 173108, 2014 Third Congress, June 25-27, 2014, Alghero, Italy from Italian Association of Agricultural and Applied Economics (AIEAA)

Abstract: The 2014 U.S. Farm Act passed into law in early February, 2014, after approximately three years of hearings. Much debate in the negotiations leading to this Farm Act focused on new programs for providing producers with support payments covering “shallow losses” in revenue. We develop an approach to examine the sensitivity of the farmer’s downside risk protection to marginal changes in the deductible in shallow loss program scenarios. The copula approach we use simultaneously considers price and yield correlation across all U.S. counties producing several major field crops. We find that average payments under the shallow loss program scenarios are elastic with respect to the program’s payment coverage rate. To empirically assess where shallow loss is likely to most benefit producers, we map at the county level the ratios of expected shallow loss payments to crop insurance premiums for corn, soybeans, cotton, and winter wheat. As tail dependencies among individual crop yield densities may vary spatially, we propose a method for grouping counties in a t-copula that allows for heterogeneity in tail dependencies.

Keywords: Agricultural and Food Policy; Demand and Price Analysis; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 29
Date: 2014
New Economics Papers: this item is included in nep-agr, nep-ger and nep-ias
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aiea14:173108

DOI: 10.22004/ag.econ.173108

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