A primary justification for government
intervention has been the failure of private
agricultural insurance markets (see, for
example, Appel, Lord, and Harrington,
1999; Hazell, Pomerada, and Valdez, 1986;
Goodwin and Smith, 1995). In a 1922
U.S. Department of Agriculture (USDA)
bulletin, Valgren describes the disastrous
experiences of fire insurance companies
that offered crop insurance in the Dakotas
and Montana in 1917 and the early 1920s.
Severe droughts caused widespread crop
losses in those states.