New Findings from Purdue University in Crop Insurance Provides New Insights (The Impact of Crop Insurance On Farm Financial Outcomes): Agriculture – Crop Insurance

2023 DEC 11 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Investigators publish new report on Agriculture - Crop Insurance. According to news reporting from West Lafayette, Indiana, by NewsRx journalists, research stated, “We use data from the Kansas Farm Management Association to estimate the impact of crop insurance liability and insurance indemnities on farm debt.”

Financial supporters for this research include United States Department of Agriculture (USDA), Purdue Center for Commercial Agriculture.

The news correspondents obtained a quote from the research from Purdue University, “Subsidized crop insurance may increase farms’ financial risk through a mechanism known as ‘risk balancing.’ Previous findings in support of risk balancing may suffer from bias due to unobservable farm characteristics and simultaneity in insurance and debt decisions. Employing a simultaneous equations model with farm fixed effects, we find no statistical relationship between crop insurance liability and debt, calling into question the risk balancing hypothesis in federal crop insurance.”

According to the news reporters, the research concluded: “We show that large insurance indemnity payments reduce farms’ reliance on short-term debt, but leave the total debt level unchanged.”

This research has been peer-reviewed.

For more information on this research see: The Impact of Crop Insurance On Farm Financial Outcomes. Applied Economic Perspectives and Policy, 2023;45(1):579-601. Applied Economic Perspectives and Policy can be contacted at: Wiley, 111 River St, Hoboken 07030-5774, NJ, USA. (Oxford University Press - http://www.oup.com/; Applied Economic Perspectives and Policy - aepp.oxfordjournals.org)

Our news journalists report that additional information may be obtained by contacting Nathan D. DeLay, Purdue University, Dept. of Agricultural Economics, West Lafayette, IN 47907, United States. Additional authors for this research include Brady Brewer, Allen Featherstone and David Boussios.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1002/aepp.13223. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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