The journal Applied Economics Perspectives and Policy just published my paper entitled, "Distributional Effects of Crop Insurance Subsidies." Farmers of the major commodity crops (and increasingly even minor crops including fruits and vegetables) are eligible to buy subsidized crop insurance. The insurance is, in principle, priced at actuarial fair rate (i.e., the price of the insurance is equal to the expected loss), but the government subsidizes the insurance premium paid by the farmer (in addition to some of the costs of the insurers). The average subsidy is around 65% of the premium amount. If there were a similar program for your car insurance, and the annual premium you pay for your car is $1000/year, you'd get back $650 in subsidy. In addition to this premium subsidy, the latest farm bill also has provisions to subsidize the deducible in the case of a loss. All this begs the question: what impact do these subsidies have on food prices and production?
From the abstract:
Because producers in different states grow different crops, the effects of the subsidies aren't equally dispersed. I write:
These differences in commodities produced lead to differences in the uptake of crop insurance subsidies and the prices paid in each location.