The Impacts of Different Farm Programs on Cash Rents

Abstract

County-level annual observations for Iowa from 1996 through 2000 were used to measure the impacts of farm program payments on cash rental rates. The econometric analysis explicitly incorporates spatial autocorrelation. Cash rental rates were found to increase by almost one dollar per acre for each additional dollar per acre paid for market loss assistance and production flexibility contracts, whereas conservation reserve program payments appear to exert no effect on cash rental rates. A counterintuitive finding that warrants further examination is the small but negative impact of deficiency payments on cash rental rates.