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Research Article Open access CC BY 4.0

Effects of Price Insurance Programs on Supply Response: A Case Study of Corn Farmers in Quebec

Bahareh Mosadegh Sedghy, Lota D. Tamini, Rémy Lambert

Asian Research Journal of Agriculture · pp. 1–14 · Published 5 Dec 2018

10.9734/ARJA/2018/45892

Abstract

Aims: This study examines the supply response of corn in the province of Quebec. Study Design:  A time series design is implemented. Place and Duration of Study: Our analysis covers the period from 1985 to 2013 and uses the data of corn production in the province of Quebec. Methodology: A generalised autoregressive conditional heteroskedasticity (GARCH) process is used to model output price expectations and its volatility. Results: We found that application of the Farm Income Stabilisation Insurance in Quebec neutralises the adverse effects of price volatilities on corn production and generates a market power for corn producers. The change in the producers' attitude towards risk is other implication of the insurance program. Conclusion: These results imply that implementation of the insurance program in the province of Quebec leads to an increase of corn production and consequently this increase in production can impose more compensation cost (paid by the insurance program) to governments.

Price volatility GARCH corn supply response effective price market price

Cited by 1

Perceived Risk and Willingness to Provide Loan to Smallholder Farmers in Ghana

Askar Choudhury, James Jones, Michael Opare-Addo · Journal of African Business · 2020

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