TY  - JOUR
AU  - Ligon, Ethan
TI  - Supply and Effects of Specialty Crop Insurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16709
PY  - 2011
Y2  - January 2011
DO  - 10.3386/w16709
UR  - http://www.nber.org/papers/w16709
L1  - http://www.nber.org/papers/w16709.pdf
N1  - Author contact info:
Ethan Ligon
Dept. of Agricultural and Resource Econ.
University of California, Berkeley
Berkeley, CA 94720-3310
Tel: 510-643-5411
E-Mail: ligon@berkeley.edu
M1  - published as Ethan Ligon. "Supply and Effects of Specialty Crop Insurance," in Joshua S. Graff Zivin and Jeffrey M. Perloff, editors, "The Intended and Unintended Effects of U.S. Agricultural and Biotechnology Policies" University of Chicago Press (2012)

M3  - presented at "Agricultural Economics Conference", March 4-5, 2010
AB  - The federal government has developed a large number of programs to insure various "specialty crops" over the last two decades; a given program is peculiar to a particular county and crop. This development has been particularly notable in California, because of its size and the diversity of crops produced there.

If the extension of federal crop insurance programs to cover fruit and vegetable production has affected either producer or consumer welfare, then we would expect to see this reflected in output and prices. Exploiting variation in the timing of program introduction in different locations for different crops to estimate the effect of crop insurance on the output and prices of the insured crops.

We find that the supply of and demand for insurance for tree crops is much larger than for non-tree crops. Crop insurance has a small but significant negative effect on prices of insured crops. This last finding is consistent with the view that demand for such highly disaggregated commodities is likely to be highly elastic. A consequence is that crop insurance for these specialty crops has little benefit for consumers, even when it generates a large supply response.
ER  -