The Center for Rural Affairs has released a report showing the impact of crop insurance on land values. Retired Iowa State University Economics Professor Emeritus Mike Duffy worked with the Center on the report. Using data from the Risk Management Agency back to 1989, his research determined the amount crop insurance premiums are subsidized does impact land values.
He says since crop insurance reduces the income risk associated with crop production this adds value because future returns aren’t as uncertain.
Duffy says the report does point out the importance of crop insurance as a risk management tool for farmers with the shift in U.S. farm policy.
Traci Bruckner with the Center for Rural Affairs says the findings demonstrate that subsidies have value to producers, and some of those subsidies get bid into land costs. She says while crop insurance is an important risk management tool it drives up production costs by increasing the cost of land. The net effect is to prop up the nation’s largest and wealthiest farms, often at the expense of smaller farms.
