The Impact of Crop Insurance on the Outcome of Corn Production in the state of Iowa from 2019 to 2024
DOI:
https://doi.org/10.61173/qj9vwa96Keywords:
Crop insurance, Liability, Loss ratio, Corn productionAbstract
The essay investigates whether crop insurance has a role in the financial and outcome risks for corn production in Iowa. Using data from the U.S. Department of Agriculture Risk Management Agency (RMA) for each county from 2019 to 2024. Counties from each year are divided into two sets of groups: high liability groups and low liability groups, to compare their average loss ratios. The outcome of the analysis shows that high liability groups experienced a higher loss ratio in the years 2019, 2020, and 2023. 2022 is the only year out of the 6 years where high liability has a lower loss ratio; meanwhile, there are no major differences between years 2021 and 2024. These results show that crop insurance does not have a consistent contribution to the outcome due to other factors, such as the weather conditions and land management. The essay supports this idea by using the results posted by the State, along with literature that introduces factors like environmental impacts, policy, and moral hazards.
References
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