Impact of Federal Crop Insurance on North Dakota Agriculture Production Efficiency

Abstract

This study examines the impact of three major policy shifts in federal crop insurance on North Dakota agriculture production efficiency. An empirical application of 53 counties in North Dakota from 1980 to 2014 indicates that “with crop insurance”, the technical efficiency of agriculture is higher as compared to “without crop insurance”. This finding implies that producers are utilizing their input resources more effectively and are increasing the use of technology efficiently in their operations with crop insurance. The results are important to policy makers as it proves that with government support, the federal crop insurance program is not only mitigating risk for producers but also allowing producers to use resources efficiently; the program is ensuring producers will continue to lead the world as low-cost producers of food, fiber, and fuel for the American public.