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Droughts and components of net farm income in select U.S. regions

Tatiana Borisova et al.

Agricultural Finance Review2025https://doi.org/10.1108/afr-03-2024-0050article
AJG 1ABDC C
Weight
0.37

What the paper says

Purpose This paper explores the relationship between droughts and U.S. agricultural sector profitability in select U.S. regions. We also examine the extent to which the farm safety net, including direct government payments and the federal crop insurance program, may compensate for the impacts of drought on farm sector profitability. Design/methodology/approach Fixed effect regressions estimate the relationship between drought and profitability for the farm sector. The analysis uses a panel of annual, state-level net farm income and its subcomponents (from the USDA, Economic Research Service) and state-level annual drought measures constructed from county crop damage days (as reported in the Spatial Hazard Events and Losses Database for the United States, or SHELDUS). SHELDUS includes Severe (D2) or more intense drought shocks for the states east of the Rocky Mountains, and these states provide the focus for our analysis. Findings Market net farm income negatively correlates with the drought measures. This relation is partially driven by the increase in production expenses during drought episodes. Further, sales from inventories tend to increase during drought periods. A significant share of damages to sector performance are offset by federal crop insurance program indemnities. Finally, our results show that drought impacts and the effects of the farm safety net are distributed differently across geographic regions. Originality/value To our knowledge, this study is the first attempt to examine drought impacts on the components of agricultural profitability, including the farm safety net and production expenses, at the sector level.

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https://doi.org/https://doi.org/10.1108/afr-03-2024-0050

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@article{tatiana2025,
  title        = {{Droughts and components of net farm income in select U.S. regions}},
  author       = {Tatiana Borisova et al.},
  journal      = {Agricultural Finance Review},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1108/afr-03-2024-0050},
}

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Droughts and components of net farm income in select U.S. regions

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.