Work

A multi-region approach to assessing fiscal and farm level consequences of government support for farm risk management

Year: 2014

Type: article

Abstract: The 2014 U.S. Farm Act has new programs for providing producers with commodity 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.

Source: Bio-based and Applied Economics

DOI: 10.13128/bae-14628

Authors: Joseph Cooper, Benoit Delbecq

Institutions: Economic Research Service, United States Department of Agriculture

Language: English

Topic: Agricultural risk and resilience

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Zero hunger

Open Access status: diamond

Funders: U.S. Department of Agriculture, Economic Research Service