Government Program Payment Mechanisms, Crop Revenue Coverage Insurance, and the Return to Farm Land

A simulation is used to examine the impact of government farm program and crop revenue coverage insurance on the probability distribution of returns to land. When combined, marketing loan program payments, agricultural market transition act payments, and market loss assistance payments substantially increase the value that risk averse producers place on the residual returns to land. Crop revenue coverage (CRC) insurance was found to have a positive certainty equivalent value for most risk averse producers. However, the risk-reducing effects of current farm program payments substantially reduced the certainty equivalent value of CRC.

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 Record created 2017-04-01, last modified 2018-01-22

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