Disambiguating Links Between Cash Crop Distributions and Crop Insurance Subsidies for Primary Southern Commodities

Abstract

Since 1994, crop insurance markets in the United States (U.S.) have fundamentally changed, and so too have yield distributions in the U.S. south. The federal government has installed itself as one of the primary agricultural insurers in the country, and has subsidized the premium costs of producers at rates up to and above 60 percent, with special dispensations given to producers who adopt genetically modified (GM) varieties of certain crops. In this thesis, I compare changes to yield distributions in a non-GM crop (winter wheat) and a GM crop (upland cotton) in the southern United States, and distinguish changes attributable to policy (specifically, increased premium subsidies) from those attributable to climate and other factors. I find effects attributable to U.S. insurance policy in upland cotton (GM) are predominantly negative in terms of risk and yield levels, indicating that dramatic increases to subsidies may have increased yield risk through production decisions.