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Abstract
In 1994, some 56
years after initial authorization, the Federal crop insurance program
remained characterized by low enrollment levels. Many argued for increased coverage and
subsequent major pieces of legislation in 1994, and 2000
expanded the program and increased
premium subsidies. Enrollment jumped, transforming the Federal crop insurance program from
a minor program into one of the major pillars of support for US crop farmers, covering over 200
million acres by 1995. The quant
ity of crop insurance demanded has often been ascribed to the
levels of subsidies offered to producers. How important are the subsidies, and what might
happen to enrollment if support for subsidies were to change? This draft shows that between
1997 and 2
002, premium subsidies appeared to induce farmers to enroll more land, but that the
effect on coverage levels appears more pronounced. At the national level, it appears likely that
changes in the price of crop insurance did little to alter the demand for
insurance as subsidy
changes did not appear to change the demand for crop insurance uniformly across either crops or
locations