Comparison of various types of farm revenue stabilization programs in Quebec

Static and dynamic target-MOTAD programming models are used to analyze the impacts of government insurance programs upon optimal resource allocation and gross margins of a representative Quebec farm. Three alternative programs are evaluated: ASRA/ASREC (price-insurance plus yield-insurance), RARE (price and yield insurance combined as revenue insurance) and CSRN (a farmer-managed saving program to which the government contributes). The results show that expected incomes are higher for RARE than for ASRA/ASREC at low levels of risk, but converge at higher levels of risk. Resource allocation and farm size differ somewhat. Two ratios are calculated to compare the social effectiveness of the two intervention programs : net government expenses to gross margins, and net government expenses to net farm income. The results show that an RARB program is superior to separate ASRA and ASREC programs, even if government transfers per unit assured are held constant. Under the CSRN scenario, farmers optimally reduce their farm size to a half or a quarter of that under the ASRA/ASREC or RARE scenarios while using strategic deposits and withdrawals from the CSRN.