Farm family disposable income is generated from farm operations, off‐farm sources, and government payments. If these three income components are fungible (a dollar from one source is a perfect substitute for a dollar from another source), then the propensities to consume each should be the same. This study examines the farm family propensity to consume from separate income sources. Results indicate that the propensity to consume off‐farm income and government payments is higher than the propensity to consume farm income.

This study compares the effectiveness of two crop insurance and two disaster assistance program designs used in conjunction with a government commodity program and a linked crop insurance/government commodity program design. Stochastic dominance analysis of farm‐level net return distributions is used to select the preferred design(s). The results indicate that the disaster assistance programs are preferred over the alternatives. The results also suggest that individual crop insurance is preferred to area crop insurance. A subsidy is required for risk‐averse managers to prefer area crop insurance to individual crop insurance.

ABSTRACT

No abstract