A Second Look at Subsidies and Supply

Date
2015-08-12
Authors
Babcock, Bruce
Babcock, Bruce
Hart, Chad
Hart, Chad
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Altmetrics
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Center for Agricultural and Rural Development
Abstract

A previous article in the Iowa Ag Review (Fall 1999, Vol. 5, No. 4) pointed out that because subsidies tend to increase the supply of whatever is subsidized, crop insurance subsidies and emergency disaster assistance will likely increase crop supplies. This supply response will decrease crop prices. That subsidies encourage supply is not controversial; however, some controversy has arisen concerning the estimated magnitude of the resulting price impact

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