@article{Liu:201654,
      recid = {201654},
      author = {Liu, Xuan and Duan, Jun and van Kooten, G. Cornelis},
      title = {An Evaluation of the Effects of Changes in the  AgriStability Program on Producers’ Crop Activities: A Farm  Modeling Approach},
      address = {2015-03},
      number = {1778-2016-141724},
      series = {REPA Working Paper},
      pages = {36},
      year = {2015},
      abstract = {In this paper, we examine the impacts of changes in  Canada’s AgriStability program on crop
allocation,  particularly the change in the payment trigger associated  with the shift from
Growing Forward (GF) to Growing Forward  2 (GF2). To examine whether this change could
affect  production decisions, and thereby potentially violate the  WTO’s ‘green box’ criteria,
we construct farm management  models for representative farms in six different  Alberta
regions. To incorporate risk and uncertainty into  the farm model, we assume that, instead of
maximizing  overall gross margin, a farmer varies her crop activities  to maximize expected
utility subject to technological and  market constraints. The models are calibrated  using
positive mathematical programming (PMP), which then  facilitates their use for policy
analysis; however, PMP is  not straightforward in the case of expected utility  maximization
because a risk parameter also needs to be  calibrated. Possible ways to address this issue  are
examined. Results indicate that the initial  introduction of the AgriStability program tilted
farmers’  planting decisions towards crops with higher returns and  greater risk, but that a
change in the AgriStability payout  trigger (going from GF to GF2) would not further  alter
land-use decisions. However, the latter shift does  reduce indemnities and farmers’ expected
profits; increases  in farmers’ aversion to risk will lead to changes in crop  allocations,
although it is not clear to what extent it  impacts trade.},
      url = {http://ageconsearch.umn.edu/record/201654},
      doi = {https://doi.org/10.22004/ag.econ.201654},
}