The analytical results, including effects on tax payer costs not formally examined, can be heuristically summarized as follows: An increase in the A&O subsidy rate increases insurance company revenues but has no effect on farmers. However, taxpayers lose because subsidies paid directly to the insurance companies increase while subsidies paid to farmers remain constant (as total coverage purchased remains constant. An increase in premium subsidy rates increases the economic benefits farmers obtain from the program and increase the total revenues obtained by crop insurance companies from the program. Taxpayers, of course, lose because each dollar of coverage receives a larger premium subsidy and coverage increases (L increases). An increase in the catastrophic loading factor almost certainly increases the total revenues obtained by the crop insurance companies but lowers the economic benefits to farmers by increasing the out of pocket price they pay for coverage. Taxpayers almost certainly lose because an increase in the catastrophic loading factor increases the total premium rate and, given a constant subsidy rate, the amount of subsidy per dollar of coverage increases. An increase in the actuarially fair premium rate almost certainly increases company total revenues, and by reducing coverage through higher farmer paid prices, lowers their costs. Farmers receive fewer benefits as they now face higher out of pocket costs for coverage. Tax payers almost surely lose because the increase in the actuarially fair premium rate increases the total premium rate for each dollar of coverage and, therefore, the amount of subsidy for each dollar of coverage. The Effects of the Joint Provisions of the 1980, 1994 and 2000 Crop Insurance Legislative Initiatives on Farmers and Crop Insurance Companies The 1980 Federal Crop Insurance Act (FCIA), the 1994 Crop Insurance Reform Act (CIRA) and the 2000 Agricultural Risk Protection Act (ARPA) all included important provisions that affected both farmers and crop insurance companies. provisions also provided benefits to agricultural lenders, many of which are small rural banks. By effectively guaranteeing farmers a revenue floor for many of their crops through substantial tax payer subsidies, as well as
The analytical results, including effects on tax payer costs not formally examined, can be heuristically summarized as follows: An increase in the A&O subsidy rate increases insurance company revenues but has no effect on farmers. However, taxpayers lose because subsidies paid directly to the insurance companies increase while subsidies paid to farmers remain constant (as total coverage purchased remains constant. An increase in premium subsidy rates increases the economic benefits farmers obtain from the program and increase the total revenues obtained by crop insurance companies from the program. Taxpayers, of course, lose because each dollar of coverage receives a larger premium subsidy and coverage increases (L increases). An increase in the catastrophic loading factor almost certainly increases the total revenues obtained by the crop insurance companies but lowers the economic benefits to farmers by increasing the out of pocket price they pay for coverage. Taxpayers almost certainly lose because an increase in the catastrophic loading factor increases the total premium rate and, given a constant subsidy rate, the amount of subsidy per dollar of coverage increases. An increase in the actuarially fair premium rate almost certainly increases company total revenues, and by reducing coverage through higher farmer paid prices, lowers their costs. Farmers receive fewer benefits as they now face higher out of pocket costs for coverage. Tax payers almost surely lose because the increase in the actuarially fair premium rate increases the total premium rate for each dollar of coverage and, therefore, the amount of subsidy for each dollar of coverage. The Effects of the Joint Provisions of the 1980, 1994 and 2000 Crop Insurance Legislative Initiatives on Farmers and Crop Insurance Companies The 1980 Federal Crop Insurance Act (FCIA), the 1994 Crop Insurance Reform Act (CIRA) and the 2000 Agricultural Risk Protection Act (ARPA) all included important provisions that affected both farmers and crop insurance companies. provisions also provided benefits to agricultural lenders, many of which are small rural banks. By effectively guaranteeing farmers a revenue floor for many of their crops through substantial tax payer subsidies, as well as
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