Effects of price insurance programs on supply responses: a case study of corn farmers in Quebec
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Date
2018
Authors
Mosadegh Sedghy, Bahareh
Tamini, Lota D.
Lambert, Rémy
Journal Title
Journal ISSN
Volume Title
Publisher
SCIENCEDOMAIN International
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.
Description
Open access article. Creative Commons Attribution 4.0 License (CC BY 4.0) applies.
Keywords
Price volatility , GARCH , Corn supply response , Effective price , Market price , Corn production , Corn producers , Corn price , Price risk , Price insurance programs
Citation
Mosadegh Sedghy, B., Tamini, L. D., & Lambert, R. (2018). Effects of price insurance programs on supply response: A case study of corn farmers in Quebec. Asian Research Journal of Agriculture, 10(1), 1-14. doi: 10.9734/ARJA/2018/45892