Author
Feng, Hongli
Corn and soybean seeding rates in the United States have diverged. We develop a theoretical model of seeding rate choices considering a resource budget trade-off between seeds and resources per seed. Using extensive farm-level data, we find soybean rates are more own-price elastic than corn. Soybean rates would decrease by 1.7% more than corn, with a 1% increase in seed-to-crop price ratio. More land-embodied inputs increase both rates, while more seed-embodied inputs increase corn rates but decrease soybean rates. The difference in price elasticities due to plant architecture has implications for both economic surplus division from innovations and ecological policy outcomes.
It is well known that insurance market information asymmetry can cause socially excessive cropping of yield-risky land. We show that crop insurance subsidies can cause the same problem absent information failures. Using field-level yield data, we find an inversed U-shaped relationship between crop prices and crop insurance subsidies’ land-use impacts. For seventeen counties in the U.S. Prairie Pothole Region, simulations show that 0.05% to 3.3% (about 2,600 to 157,900 acres) of land under crop insurance would not have been converted from grassland had premium subsidies not existed. Land-use impacts of Sodsaver in the 2014 Farm Act are also quantified.