Distributional Effects of Selected Farm and Food Policies: The Effects of Crop Insurance, Snap, and Ethanol Promotion

71 Pages Posted: 7 Jun 2018

See all articles by Jayson L. Lusk

Jayson L. Lusk

Oklahoma State University - Department of Agricultural Economics

Date Written: 04/08/2015

Abstract

This paper investigates the influence of three federal policies often conjectured to have some of the most pronounced effects on food markets: subsidized crop insurance; the Supplemental Nutrition Assistance Program (SNAP); and ethanol promotion. Results indicate that removing subsidized crop insurance would yield economic benefits of $932 million per year. Removing crop insurance would reduce producer and consumer surplus, with taxpayers being the only aggregate beneficiaries, suggesting that the costs are "hidden" in the form of a higher tax burden. Agricultural producers in several western states would benefit from the removal of crop insurance subsidies, whereas producers in the Great Plains states would be the biggest losers. Depending on how SNAP recipients spend their disbursements, the projected benefits of dismantling SNAP range from $12.7 billion to $42.8 billion per year. Reducing ethanol demand is projected to benefit livestock producers and food consumers while harming corn producers.

Suggested Citation

Lusk, Jayson L., Distributional Effects of Selected Farm and Food Policies: The Effects of Crop Insurance, Snap, and Ethanol Promotion (04/08/2015). MERCATUS WORKING PAPER, Available at SSRN: https://ssrn.com/abstract=3191300 or http://dx.doi.org/10.2139/ssrn.3191300

Jayson L. Lusk (Contact Author)

Oklahoma State University - Department of Agricultural Economics ( email )

Stillwater, OK 74078-6026
United States
405-744-6161 (Phone)

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