Tennessee and Mississippi upland cotton producer willingness to participate in hypothetical crop insurance programs

Abstract

Changes under the Agricultural Act of 2014 have reconnected federally subsidized crop insurance to conservation compliance and eliminated direct payments that were tied to conservation compliance. The net effects of these changes on compliance with conservation standards and on the environment are uncertain, especially in regions such as the southern U.S. where direct payments are higher than crop insurance subsidies. We assess two hypothetical pilot programs that strengthen the link between federally subsidized crop insurance and conservation compliance with cover crop (CC) and no-till (NT) adoption by offering an additional Environmental Quality Incentive Program cost-share payment to producers who also purchase Stacked Income Protection Plan (STAX) crop insurance. We determined the factors that affect Tennessee and North Central Mississippi cotton producer willingness to participate in the hypothetical pilot programs. Data were collected using a mail survey of cotton producers conducted in early 2015. A bivariate probit model was estimated to determine the factors that affect cotton producer willingness to participate in two pilot programs. Results found that 35% of the cotton producers would be willing to participate in the CC/ STAX pilot program, whereas 28% indicated they would participate in the NT/STAX pilot program. Producer age, income, debt-to-asset ratio, and future purchase of STAX influenced their willingness to participate in the pilot programs. Results from this study could aid in the discussion of the upcoming farm bill.