The Impact of Crop Insurance on the Economic Performance of Hungarian Cropping Farms

Crop insurance products can improve and stabilize economic performance. However, due to insurance market imperfections, the use of insurance products often requires governmental support. This paper analyses the actual impact of insurance products on the economic performance of cropping farms by linking the economic performance model with the insurance demand model. For this analysis, a simultaneous equation system is solved. Our estimations show a negative impact of insurance on the economic performance indicators farm profit, labour productivity and land productivity. The analysis of the insurance demand side confirms financial limitations of many farms