ABSTRACT
Farm real estate comprises approximately 80 percent of farm assets. It is hypothesized that a large share of public policies like farm programs, public-private crop insurance program and politics is capitalized into farm real estate values. The income capitalization framework also evaluates the contribution of the levels and variability associated with farm returns, farm program payments and crop insurance program payments to farm real estate. The United States Department of Agriculture Risk Management Agency for Federal Crop Insurance Corporation administers public-private crop insurance program in the United States. An increase in the risk or variability associated with expected crop insurance program payments will reduce expected farm program payments due to the negative and statistically significant sign. The average number of crops with insurance policies is around 10 crops with 51 crops and one crop on the two extremes. The average share of crop insurance acres and the policies receiving indemnities are 8 percent and 15 percent, respectively.
