Testing the effectiveness of government transfers for agricultural revenue stabilization: the case of the Western Canadian grain sector

Abstract

This is the first study to document major agricultural policy transfers and their impact on agricultural stabilization. While many studies have analyzed stabilization theory, this is the first to use a complete actual data set to empirically analyze stabilization effectiveness. Transfers in the Western Canadian grain sector are identified and their effectiveness for providing revenue stability is examined. Results show that while agricultural policies from 1971 to 1990 increased the total gross grain revenue, they did not decrease the variability of the revenue. Therefore, the objective of revenue stabilization for agricultural policy may not have been adequately achieved.