Impacts of crop insurance on cash rents

Nelson, Blaine S

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https://hdl.handle.net/2142/98413 Copy

Description

Title

Impacts of crop insurance on cash rents

Author(s)

Nelson, Blaine S

Issue Date

2017-07-19

Director of Research (if dissertation) or Advisor (if thesis)

Sherrick, Bruce J.

Committee Member(s)

• Paulson, Nick
• Kuethe, Todd
• Baylis, Katherine

Department of Study

Agr & Consumer Economics

Discipline

Agricultural & Applied Econ

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

M.S.

Degree Level

Thesis

Keyword(s)

• Crop insurance
• Cash rents
• Farmland
• Land value

Abstract

This study examines the degree to which net payments from federal crop insurance products impact cash rents paid for farmland. A spatial panel model is employed to control for spatial dependence and heterogeneity in cash rental rates. Results show that producers factor a statistically significant proportion of the value received from crop insurance into cash rents. However, the directly measurable rate is lower than found in previous studies. This result likely reflects the complexity in the relationship between losses and crop insurance rates, and the aggregation across producers in both measured rent and estimates of the net value of crop insurance to a producer. Further, the indirect effects of crop insurance and the ancillary impacts of a producer’s risk profile are difficult to identify independently due to the highly variable nature of crop insurance payments, and the smoothed nature of cash rental values. Nonetheless, even as the model removes much of the variation in the data, this analysis shows crop insurance is an important factor in a producer’s expected revenue, as cash rents are positively affected in counties that receive consistent and positive net value.

Graduation Semester

2017-08

Type of Resource

text

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http://hdl.handle.net/2142/98413

Copyright and License Information

Copyright 2017 Blaine Nelson

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