Factors affecting crop insurance use among underserved producers
Abstract
Historically, minority producers have been plagued by racial disparities resulting in them settling in areas less suitable for farming and being discriminated against in federal farm programs. In the two most recent Farm Bills, 2014 and 2018, there has been an increase in policies supporting underserved producers. Policies include the addition of veterans in the definition of historically underserved producers as well as reducing experience requirements for veterans to qualify for loans, amending the definition of beginning farmers from someone with five years or less experience to 10 years or less, and offering veteran and beginning producers an additional 10% subsidy rate above normal. The objective of this study is to analyze how spatial, demographic and risk (drought) effect the crop insurance purchases of underserved and veteran producers given the changes made in the 2018 Farm Bill. A cross-sectional analysis is used to determine if veterans and minorities faced greater agricultural risk and if they have equal access to crop insurance to help mitigate that risk prior to the implementation of the 2018 Farm Bill. A difference-in-difference technique is then used to determine the effect the implementation of the 2018 Farm Bill and drought levels had on crop insurance adoption. The cross-sectional analysis indicated a negative correlation between shares of veterans and minorities in a county and access to crop insurance, and a positive correlation between the shares in a county and agricultural risk of drought. The difference-in-difference showed that both veterans and minorities had increased access to crop insurance after the implementation of the 2018 Farm Bill. This is important as crop insurance is the primary way producers can mitigate risk.
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- OSU Theses [15752]