An Empirical Analysis of Acreage Effects of Participation in the Federal Crop Insurance Program

Posted: 11 Oct 2004

See all articles by Barry K. Goodwin

Barry K. Goodwin

North Carolina State University

Monte Vandeveer

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

John L. Deal

North Carolina State University

Abstract

The extent to which crop insurance programs have resulted in additional land being brought into production has been a topic of considerable debate. We consider multiequation structural models of acreage response, insurance participation, CRP enrollment, and input usage. Our analysis focuses on corn and soybean production in the Corn Belt and wheat and barley production in the Upper Great Plains. Our results confirm that increased participation in insurance programs provokes statistically significant acreage responses in some cases, though the response is very modest in every case. In the most extreme cases, 30% decreases in premiums as a result of increased subsidies provoke acreage increases ranging from 0.2% to 1.1%. A number of policy simulations involving increases in premium subsidies are considered.

Suggested Citation

Goodwin, Barry K. and Vandeveer, Monte and Deal, John L., An Empirical Analysis of Acreage Effects of Participation in the Federal Crop Insurance Program. American Journal of Agricultural Economics, Vol. 86, No. 4, pp. 1058-1077, November 2004. Available at SSRN: https://ssrn.com/abstract=595055

Barry K. Goodwin (Contact Author)

North Carolina State University ( email )

Box 8109
324 C Nelson
Raleigh, NC 27695-8109
United States
919-515-4547 (Phone)
919-515-1824 (Fax)

Monte Vandeveer

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

John L. Deal

North Carolina State University

Hillsborough Street
Raleigh, NC 27695
United States

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