The article examines the impact of policy change on enterprise unit subsidies that took place in 2009 on the quantity demanded for crop insurance.
The analysis first employs time series econometric tools to analyze whether the time path of the share of enterprise units within buyup acres is influenced by the policy change in enterprise unit subsidies. It then comparatively examines the insurance experience between 2008 (right before the change) and 2015 (well after the change).
Between 2008 and 2015, the insurance experience generally indicates that the share of enterprise units within buyup coverage surged, the share of acres under catastrophic coverage declined, and the share acres in high coverage levels increased. Meanwhile, growers have increasingly utilized crop-hail policies.
This appears to be the first study (1) quantifying the sensitivity of farmers' unit choices with respect to subsidy rates in those units and finding that such choices are actually highly responsive (elastic), and (2) pointing out the interaction between MPCI and crop-hail products and offering insights as to their combined use. The findings should be of considerable value to policymakers, academics, bankers, and producers in regards to the design and use of risk management tools.
Bulut, H. (2020), "The impact of enterprise unit policy change on the quantity demanded for crop insurance", Agricultural Finance Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/AFR-08-2019-0090Download as .RIS
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