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          Volume 37, Number 03, December 2005 >

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Title: Effects of Federal Risk Management Programs on Optimal Acreage Allocation and Nitrogen Use in a Texas Cotton-Sorghum System
Authors: Seo, Sangtaek
Mitchell, Paul D.
Leatham, David J.
Keywords: crop insurance
extensive margin
intensive margin
loan deficiency payments
revenue insurance
JEL Codes: Q12
Issue Date: 2005-12
Abstract: We analyze the effects of crop insurance and the Marketing Loan Program on optimal nitrogen use and acreage allocation for a case cotton-sorghum farm in Texas. A mathematical programming model is used to solve for the optimal nitrogen fertilizer rate, crop acreage allocation, coverage level, and price election factor, along with participation in the crop insurance and the Marketing Loan Program for both crops. Results show that depending on the crop and farmer risk aversion, these federal risk management programs increase or decrease optimal fertilizer rates-6% to 3%, increase optimal cotton acreage 94% to 144%, and decrease sorghum acres up to 50%.
Institution/Association: Journal of Agricultural and Applied Economics>Volume 37, Number 03, December 2005
Total Pages: 15
From Page: 685
To Page: 699
Collections:Volume 37, Number 03, December 2005

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