| A major purpose of this study is to analyze the effect of premium subsidy changes on the adoption of insurance product type and coverage amount by soybean and corn producers in South Dakota. Expanded premium subsidies under the Agricultural Risk Protection Act of 2000 led to higher demand for revenue products at higher insurance coverage levels. An increased premium rate, caused by prospective reductions in the premium subsidy, would likely result in lower demand for insurance coverage. Farm yield variability, farm size, price election levels, county-level expected yield and premium rate are significant factors in determining product type and coverage amount choices. A three-stage least squares model is introduced to explain producers' simultaneous decisions to choose an insurance product type and a coverage amount. |
