Implications of the state assistance program in the province of Quebec: the case of lamb production

Mosadegh Sedghy, Bahareh and Tamini, Lota D. and Lambert, Remy (2021): Implications of the state assistance program in the province of Quebec: the case of lamb production. Published in: European Journal of Applied Sciences , Vol. 10, (10 January 2022)

Abstract

This study investigated the impact of the Farm Income Stabilization Insurance (ASRA) on the adoption of price risk management strategies by lamb producers in the province of Quebec. This study employed a Generalized Autoregressive Conditional Heteroskedasticity (GARCH) process to model price risks. The results indicated that the application of the Farm Income Stabilization Insurance in Quebec generates crowding-out effects on price risk management strategies, which decreases the efficiency of this program. On the other hand, the product-specific nature of ASRA leads to some challenges such as a modification in the revenue distribution across the farm, increased production, increased indebtedness of farmers and the increased financial burden on governments’ shoulders. Finally, the results imply asymmetric impacts of negative and positive shocks generated by ASRA which result in an increasing risk-aversion of producers over the periods of decreased prices and a decreasing risk aversion over the periods of increased prices.

• Item Type: MPRA Paper
• Language: English
• Keywords: Crowding-out effects; ASRA; lamb production; Asymmetric GARCH; risk aversion; decoupled payments; Quebec; Relative marginal risk premium; state assistance programs; price volatility
• Subjects: D - Microeconomics > D2 - Production and Organizations > D20 - General

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