Open AccessEffects of Price Insurance Programs on Supply Response: A Case Study of Corn Farmers in Quebec
Author(s) -
Bahareh Mosadegh Sedghy,
Lota D. Tamini,
Rémy Lambert
Publication year - 2018
Publication title -
asian research journal of agriculture
Language(s) - English
Resource type - Journals
ISSN - 2456-561X
DOI - 10.9734/arja/2018/45892
Subject(s) - autoregressive conditional heteroskedasticity , volatility (finance) , production (economics) , crop insurance , agricultural economics , economics , autoregressive model , heteroscedasticity , business , agricultural science , agriculture , econometrics , microeconomics , geography , environmental science , archaeology
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.
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