An Examination of the Effects of Price Supports and Federal Crop Insurance Upon the Economic Growth, Capital Structure, and Financial Survival of Wheat Growers in the Northern High Plains

Abstract

Abstract This study examines the effects of both farm price support programs and federally subsidized crop insurance programs upon the profitability, capital structure, and financial survival rates of High Plains wheat producers. The alternative farm programs are analyzed in an intertemporal dynamic setting. Results indicate that the producer's first response to risk is to restrict the use of debt. Price support programs and crop insurance are substitutes in reducing producer risk. The availability of crop insurance in a setting with price supports allows producers to service higher levels of debt with no increase in risk.