Chemical usage in production agriculture: do crop insurance and off-farm work play a part?

Abstract

In recent years a growing body of literature in the agricultural policy arena has examined the association between crop insurance and off-farm employment. However, little is known about the extent to which these two activities may be related to environmental quality, in particular their impacts on fertilizer/chemical use of the farm. To fill this gap, this paper examines the effect of crop insurance and off-farm work on fertilizer/chemical expenses within the farm household framework. Quantile regression results from a national representative farm-level data show that off-farm work by the farm operator tends to decrease fertilizer/chemical expenses, and the effect is more pronounced at the higher percentiles of the distribution of fertilizer/chemical expense. In contrast, a positive effect of crop insurance on fertilizer/chemical expenses is evident, and the effect is robust across the entire distribution.