Is crop insurance to blame for narrow crop rotations in Saskatchewan?
Date
2025-01-06
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Type
Thesis
Degree Level
Masters
Abstract
My research uses field-level data to empirically quantify the relationship between crop insurance and agricultural producers’ crop rotation decisions. I answer the question: is crop insurance aggravating the trend away from agronomically advised diverse crop rotations towards narrower rotations in Saskatchewan? I use field- and producer-specific yield and insurance coverage level data from the Saskatchewan Crop Insurance Corporation in a three-part empirical approach to study the relationship between crop insurance and crop rotations. I first develop and estimate a field-level expected profit model for popular crops that uses yield observations, rotation variables, and fixed effects to estimate expected yield before being combined with spring prices and soil zone costs to predict producers’ expected profit and risk. The predicted expected profit and risk are used in a multinomial logit crop choice model that predicts producers’ crop choices based on random utility theory. The crop choice model is used to predict producers’ acreage response to changing insurance coverage levels. My results suggest that crop insurance only has a marginal effect on farmers’ crop rotation decisions, even when crop insurance is completely denied to producers who plant narrow rotations. Instead, crop specific characteristics, previously planted crops, and geographic crop compatibility appear to be far more important factors to producers when they are making crop rotation decisions. These results suggest that crop insurance is not the driving force behind the trend towards narrower crop rotations. This is an important finding for policy makers looking to encourage producers to adopt agronomically advised diverse rotations.
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Keywords
Crop Insurance, rotation
Citation
Degree
Master of Science (M.Sc.)
Department
Agricultural and Resource Economics
Program
Agricultural Economics