Agricultural policy continues to play a large role in risk reduction for agricultural producers in the United States. However, current budget deficits and growing national debt has many policy makers looking for ways to change the farm safety net. The interactions of current and new policy tools including crop insurance and representative farms were examined in a simulation model for four representative farms. Various outcomes were examined with attention primarily focused on (1) magnitude and frequency of farm program payments, (2) government costs and farmer return on insurance premiums paid, (3) coefficient of variation of farm revenue and probability of negative ending cash, and (4) Stochastic Efficiency with Respect to a Function (SERF) analysis. Results indicated that Supplemental Coverage Option (SCO) and Stacked Income Protection Plan (STAX) programs provide high farmer returns and positive mean payments. However, SCO, STAX, and crop insurance provided lower levels of protection when both the base and harvest price decline by the same amount. Overall, the House farm bill was preferred by all four farms for every scenario. Additionally, the results for Alternative 4, which examined different insurance coverage levels, showed that it was possible for a representative farm to lower its insurance coverage and improve its financial position. The results indicate how farm programs cover various types of potential losses faced by producer which makes the results meaningful to both producers and policy makers alike.

The primary objective of this dissertation is to investigate whether Canadian whole farm programs with both income-supporting and income-stabilizing attributes, which are considered as decoupled based on the WTO criterion, are actually decoupled from production. The dissertation began with the review of the existing theoretical and empirical literature on the impact of programs designed to be decoupled payments on acreage response including studies related to the wealth and insurance effects. The review revealed that previous studies lack a detailed theoretical model of how acreage decisions will be affected by stabilizing the farm profit (insurance effect) as well as the higher expected profit (wealth effect). Given the nature of Canadian whole farm programs which attempt to smooth income, to examine the whole farm programs, a model is needed to capture the insurance effect arising from these programs as well as the wealth effect.<p> To address this gap, the theoretical framework developed by Chavas and Holt (1990) was extended, in this dissertation, to incorporate the insurance effect into the farmers' acreage decisions under uncertainty. In particular, by developing theoretical restrictions, which consider the relationship between income stabilization compensated and uncompensated acreage decision functions, the insurance effect emphasized in the literature was explicitly derived within the theoretical model. The acreage allocated to each crop was derived as a function of expected crop profits, elements of the variance-covariance matrix of crop profits, expected total wealth (initial wealth plus market profit), and variance of total wealth. The government payments were incorporated into the model through truncation of the probability distribution of profits. Specifically, the whole-farm programs truncated the total (farm) profit distribution which affected the expected total wealth and variance of total wealth.<p> The theoretical model was then used to develop an empirical model. The econometric model was applied to acreage data in the Canadian Prairies from 1970 to 2006 in order to statistically test if the whole farm programs were really decoupled. The results revealed that coefficients of expected total wealth (wealth effect) and variance of total wealth (insurance effect) were statistically significant in the whole system, which implied the whole-farm programs were production and therefore trade distorting and were not actually decoupled, even if they satisfied the WTO criteria. The statistically significant coefficients for expected total wealth and variance of total wealth variables were then used to simulate the impact of recent whole-farm programsthe Western Grain Stabilization Act (WGSA), the Net Income Stabilization Account (NISA) and the Canadian Agricultural Income Stabilization (CAIS)on crop choices.<p> The results suggested that the WGSA, NISA and CAIS programs have increased the acreage allocated to spring wheat and peas (through both wealth and insurance effects, although the insurance effect appears to dominate) while they have decreased the acreage for barley (through the wealth effect), canola and hay (through the insurance effect) in the prairie provinces. In general, the size of the wealth effect was quite small, while the insurance effect was always significant. Specifically, the acreage allocated to wheat increased by 7.79 percent on average across Prairies while canola acreage decreased by 8.86 percent under the CAIS. Thus, the empirical results revealed that for Canadian whole-farm programs the impact of the effects related to risk is important. Particularly, the results showed the inherent difficulty in divorcing the stabilization effect received by Canadian whole-farm programs from farmers' production decisions.

The primary objective of this dissertation is to investigate whether Canadian whole farm programs with both income-supporting and income-stabilizing attributes, which are considered as decoupled based on the WTO criterion, are actually decoupled from production. The dissertation began with the review of the existing theoretical and empirical literature on the impact of programs designed to be decoupled payments on acreage response including studies related to the wealth and insurance effects. The review revealed that previous studies lack a detailed theoretical model of how acreage decisions will be affected by stabilizing the farm profit (insurance effect) as well as the higher expected profit (wealth effect). Given the nature of Canadian whole farm programs which attempt to smooth income, to examine the whole farm programs, a model is needed to capture the insurance effect arising from these programs as well as the wealth effect.<p> To address this gap, the theoretical framework developed by Chavas and Holt (1990) was extended, in this dissertation, to incorporate the insurance effect into the farmers' acreage decisions under uncertainty. In particular, by developing theoretical restrictions, which consider the relationship between income stabilization compensated and uncompensated acreage decision functions, the insurance effect emphasized in the literature was explicitly derived within the theoretical model. The acreage allocated to each crop was derived as a function of expected crop profits, elements of the variance-covariance matrix of crop profits, expected total wealth (initial wealth plus market profit), and variance of total wealth. The government payments were incorporated into the model through truncation of the probability distribution of profits. Specifically, the whole-farm programs truncated the total (farm) profit distribution which affected the expected total wealth and variance of total wealth.<p> The theoretical model was then used to develop an empirical model. The econometric model was applied to acreage data in the Canadian Prairies from 1970 to 2006 in order to statistically test if the whole farm programs were really decoupled. The results revealed that coefficients of expected total wealth (wealth effect) and variance of total wealth (insurance effect) were statistically significant in the whole system, which implied the whole-farm programs were production and therefore trade distorting and were not actually decoupled, even if they satisfied the WTO criteria. The statistically significant coefficients for expected total wealth and variance of total wealth variables were then used to simulate the impact of recent whole-farm programsthe Western Grain Stabilization Act (WGSA), the Net Income Stabilization Account (NISA) and the Canadian Agricultural Income Stabilization (CAIS)on crop choices.<p> The results suggested that the WGSA, NISA and CAIS programs have increased the acreage allocated to spring wheat and peas (through both wealth and insurance effects, although the insurance effect appears to dominate) while they have decreased the acreage for barley (through the wealth effect), canola and hay (through the insurance effect) in the prairie provinces. In general, the size of the wealth effect was quite small, while the insurance effect was always significant. Specifically, the acreage allocated to wheat increased by 7.79 percent on average across Prairies while canola acreage decreased by 8.86 percent under the CAIS. Thus, the empirical results revealed that for Canadian whole-farm programs the impact of the effects related to risk is important. Particularly, the results showed the inherent difficulty in divorcing the stabilization effect received by Canadian whole-farm programs from farmers' production decisions.

In this thesis, I explore how white producers of U.S. agriculture’s top commodity—cattle—understand participation in government farm programs. As such, the central research question guiding this research is: how do white Mississippi cattle producers portray their decisions to pursue (or not pursue) government farm programs? Specifically, I offer insights into how farmers reconcile tension between being independent/self-sufficient and accepting government subsidies. Using data from 289 hours of participant observation at agricultural events and 33 interviews with producers, I examine sociologically how these understandings of farm program participation relate to producers’ ideological notions of “success” and how race and gender shape these understandings.

The paper applies a non-parametric propensity score matching approach to evaluate the effects of two types of farm programs (agri-environment (AE) programs and the less favoured area (LFA) scheme) on input use and farm output of individual farms in Germany. The analysis reveals a positive and significant treatment effect of the LFA scheme for farm sales and the area under cultivation. Participants in AE schemes are found to significantly increase the area under cultivation (in particular grassland), resulting in a decrease of livestock densities. Furthermore, participation in AE programs significantly reduced the purchase of farm chemicals (fertilizer, pesticide). We also find substantial differences in the treatment effect between individual farms (heterogeneous treatment effects). Farms which can generate the largest benefit from the program are most likely to participate. (authors' abstract) / Series: Department of Economics Working Paper Series