The Future of US Farm Policy (original) (raw)
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Applied Economic Perspectives and Policy
This study uses farm-level information from the ARMS database to evaluate the distribution of payments from major 2014 Farm Bill safety net programs—federal crop insurance, Agricultural Risk Coverage, and Price Loss Coverage—across farm size. Results indicate that farms within the top decile for crop sales receive over two-thirds of the total payments from these programs. Recent legislative proposals to implement payment caps on each farm are shown to impact a relatively small percentage of farms that are almost entirely within the top decile of crop sales. However, implementing these caps is likely to result in as much as $2.51 billion in taxpayer savings. These help provide direction for continued efforts to design cost-effective, equitable agricultural safety net policies.
The Effects of the Premium Subsidies in the U.S. Federal Crop Insurance Program on Crop Acreage
2016
The U.S. federal crop insurance program experienced periodic policy changes over the past three decades that increased premium subsidies. These premium subsidies encourage changes in crop acreage for two reasons. First, holding insurance coverage constant, premium subsidies directly increase the expected return, which may encourage more acreage of the insured crop (profit effect). Second, premium subsidies encourage farms to increase crop insurance coverage. With more insurance coverage, farm revenue, which includes crop revenues and expected crop insurance indemnity payments, becomes less variable and therefore, acreage of the insured crop may increase (coverage effect). By exploiting exogenous policy changes, this study estimates the sum of these two distinct effects of premium subsidies on crop acreage. Using about 180,000 county-crop-year observations for seven major crops over 26 years, we estimate that a 10% increase in the premium subsidy causes a 0.39% increase in crop acrea...
The Buck Stops Where? The Distribution of Agricultural Subsidies
2011
The U.S. has a long history of providing generous support for the agricultural sector. A recent omnibus package of farm legislation, the 2008 Farm Bill (P.L. 110-246) will provide in excess of 284billioninfinancialsupporttoU.S.agricultureoverthe2008−2012period.Commodityprogrampaymentsaccountfor284 billion in financial support to U.S. agriculture over the 2008-2012 period. Commodity program payments account for 284billioninfinancialsupporttoU.S.agricultureoverthe2008−2012period.Commodityprogrampaymentsaccountfor43.3 billion of this total. Our paper is concerned with the distribution of these benefits. Farm subsidies make agricultural production more profitable by increasing and stabilizing farm prices and incomes. If these benefits are expected to persist, farm land values should capture the subsidy benefits. We use a large sample of individual farm land values to investigate the extent of this capitalization of benefits. Our results confirm that subsidies have a very significant impact on farm land values and thus suggest that landowners are the real benefactors of farm programs. As land is exchanged, new owners will pay prices that reflect these benefits, leaving the benefits of farm programs in the hands of former owners that may be exiting production. Approximately 45% of U.S. farmland is operated by someone other than the owner. We report evidence that owners benefit not only from capital gains but also from lease rates which incorporate a significant portion of agricultural payments even if the farm legislation mandates that benefits must be allocated to producers. Finally, we examine rental agreements for farmers that rent land on both a cash and share basis. We find evidence that farm programs that are meant to stabilize farm prices provide a valuable insurance benefit.
An Empirical Evaluation of the Acreage Effects of US Farm Program Payments
2004
This analysis utilises county-level data from the U.S. corn belt to evaluate the extent to which U.S. farm program benefits, particularly the Agricultural Market Transition Act (AMTA) and market loss assistance payments, bring about distortions in production. A simple county-level analysis is used to evaluate various aspects of the distortion question. Overall, the results suggest that fixed farm program payments are nearly production-neutral. There is some evidence that AMTA payments may have led to modest increases in production of soybeans, and that MLAs may have increased production of corn and soybeans. However, acreage effects are very modest.
The Tangled Web of Agricultural Insurance: Evaluating the Impacts of Government Policy
SSRN Electronic Journal, 2014
This paper examines how changes in major elements of the U.S. federal crop insurance program affect the structure of the agricultural insurance industry. We model interactions between farmers, insurance agents and insurance companies. Marginal changes in government policy (premium subsidy rate, A&O subsidy rate, and loading factor) affect the insurance premium rate, agent compensation rates, agent effort levels, and market demand for crop insurance. Farmers prefer a marginal increase in the premium subsidy rate, but the insurance companies' most preferred policy is a marginal increase in the A&O subsidy rate. We also evaluate the consequences of changes in crop prices.