A previous article in the Iowa Ag Review (Fall 1999, Vol. 5, No. 4) pointed out that because subsidies tend to increase the supply of whatever is subsidized, crop insurance subsidies and emergency disaster assistance will likely increase crop supplies. This supply response will decrease crop prices. That subsidies encourage supply is not controversial; however, some controversy has arisen concerning the estimated magnitude of the resulting price impact
Babcock, Bruce A. and Hart, Chad E.
"A Second Look at Subsidies and Supply,"
Iowa Ag Review: Vol. 6
, Article 2.
Available at: http://lib.dr.iastate.edu/iowaagreview/vol6/iss1/2