Aims: This study examines the supply response of corn in the province of Quebec.
Study Design: A time series design is implemented.
Place and Duration of Study: Our analysis covers the period from 1985 to 2013 and uses the
data of corn production in the province of Quebec.
Methodology: A generalised autoregressive conditional heteroskedasticity (GARCH) process is
used to model output price expectations and its volatility.
Results: We found that application of the Farm Income Stabilisation Insurance in Quebec
neutralises the adverse effects of price volatilities on corn production and generates a market
power for corn producers. The change in the producers' attitude towards risk is other implication of
the insurance program.
Conclusion: These results imply that implementation of the insurance program in the province of
Quebec leads to an increase of corn production and consequently this increase in production can
impose more compensation cost (paid by the insurance program) to governments