Evaluating policy design choices for the margin protection program for dairy producers: An expected indemnity approach

John Newton, Cameron S. Thraen, Marin Bozic

Research output: Contribution to journalArticle

Abstract

The Agricultural Act of 2014 replaced dairy product price supports and countercyclical income support payments with the Margin Protection Program for Dairy Producers. Using farm-level data, producer decisions and aggregate policy costs under a variety of risk environments and policy design alternatives are simulated. Fixed premium rates may result in budget outlays that are substantially higher than for equivalent variable-rate insurance subsidized at levels observed in revenue-based crop insurance policies. Due to the absence of adjusted gross income or production eligibility constraints, a significant portion of benefits may accrue to a small share of large dairy farms.

Original languageEnglish (US)
Pages (from-to)712-730
Number of pages19
JournalApplied Economic Perspectives and Policy
Volume38
Issue number4
DOIs
StatePublished - Jan 1 2016

Fingerprint

indemnity
insurance
producer
farm
income
premium
revenue
budget
act
costs
crop
cost
programme
policy
Income
Dairy
Policy design
Margin
rate
Crop insurance

Keywords

  • Agricultural act of 2014
  • Dairy
  • Farm program decisions
  • Margin protection program
  • Monte-Carlo simulations

Cite this

Evaluating policy design choices for the margin protection program for dairy producers : An expected indemnity approach. / Newton, John; Thraen, Cameron S.; Bozic, Marin.

In: Applied Economic Perspectives and Policy, Vol. 38, No. 4, 01.01.2016, p. 712-730.

Research output: Contribution to journalArticle

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