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Producer behavior in the presence of an income stabilization program

Producer behavior in the presence of an income stabilization program Passage of the 1996 Farm Bill marked a dramatic departure in federal farm policy as the longstanding deficiency payment program was replaced with nonrisk responsive transition payments. In light of the departure, subsidized savings has been proposed as a mechanism to provide risk protection to agricultural producers. Using Canadas National Income Stabilization Account NISA program as an example of a subsidized savings program, a stochastic programming model of income stabilization is developed. The model is then used to investigate the optimizing behavior of a typical Midwestern crop producer. The results suggest a fair amount of program design flexibility exists, and that the government can use this flexibility to stimulate initial and continual participation while minimizing capital outlays. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Agricultural Finance Review Emerald Publishing

Producer behavior in the presence of an income stabilization program

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0002-1466
DOI
10.1108/00214680080001109
Publisher site
See Article on Publisher Site

Abstract

Passage of the 1996 Farm Bill marked a dramatic departure in federal farm policy as the longstanding deficiency payment program was replaced with nonrisk responsive transition payments. In light of the departure, subsidized savings has been proposed as a mechanism to provide risk protection to agricultural producers. Using Canadas National Income Stabilization Account NISA program as an example of a subsidized savings program, a stochastic programming model of income stabilization is developed. The model is then used to investigate the optimizing behavior of a typical Midwestern crop producer. The results suggest a fair amount of program design flexibility exists, and that the government can use this flexibility to stimulate initial and continual participation while minimizing capital outlays.

Journal

Agricultural Finance ReviewEmerald Publishing

Published: May 5, 2000

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