Farm Program Benefits Research Articles

The Potential Role for a Nitrogen Compliance Policy in Mitigating Gulf Hypoxia

AbstractWe evaluate whether expanding compliance to include nitrogen management could be an effective tool to reduce excess nitrogen applications in the Mississippi and Atchafalaya River Basin (MARB). Compliance requires farmers to meet some minimum standard of environmental protection on environmentally sensitive land as a condition for receiving federal farm program benefits. Using farm‐level data on “excess” nitrogen applications and program benefits, we estimate the level of compliance and the reduction in excess nitrogen applications to cropland in the MARB. Extending compliance provisions to nitrogen management could reduce excess applications up to 60% under ideal conditions.

A New U.S. Farm Household Typology: Implications for Agricultural Policy

Changes in U.S. agriculture have yielded a diversity of farm types. These changes have extended beyond the farm business and into the farm household. The objective of this research is to motivate, develop, and discuss the policy implications of a new typology of U.S. farm households, which is based on household economic theory. Using the 2003 Agricultural Resource Management Survey and statistical analysis, the U.S. Farm Household Typology identifies six mutually exclusive groups of U.S. farm households. This typology is then compared to the current Economic Research Service Farm Typology and used to investigate the distribution of government payments. T he debate concerning U.S. farm programs and farm policy encompasses a number of issues that are broader than whether the specifics of the 2002 legislation should be continued or changed. These issues include U.S. competitiveness in the international marketplace; the potential conflict between U.S. domestic and international trade policy; the impact of farm program payments on land and other resource values; the distribution of farm program benefits; and whether price and income support programs are an effective and efficient mechanism for enhancing the economic well-being of farm families. Analyses to date have three fundamental deficiencies. First, they ignore the fact that a vast majority of farms receive substantial income from non-farm sources and that the decision nexus for most farms with respect to resource allocation

Are “Decoupled” Farm Program Payments Really Decoupled? An Empirical Evaluation

This analysis utilizes farm‐level data to evaluate the extent to which U.S. farm program benefits, particularly direct payments, bring about distortions in production. The issue is important in WTO negotiations and in the debate over the distortionary effects of decoupled (“green‐box”) payments. Our results suggest that the distortions brought about by AMTA payments, though statistically significant in some cases, are very modest. Larger effects are implied for market loss assistance payments. Probit models suggest that AMTA payments do not influence the likelihood that agents will acquire more land. Our results are reinforced using an aggregate county‐level acreage model.

Capitalization of Farm Policy Benefits and the Rate of Return to Policy-Created Assets: Evidence from California Dairy Quota

The rate of return to ownership of California dairy quota is about 27% per year-well above that of typical financial assets, but in line with other measured returns to agricultural quotas. Ownership of dairy quota does not contribute positively to total variation of typical portfolios, including those of dairy farm assets, and so contributes little or no portfolio risk. A plausible alternative hypothesis for the high rate of return is that quota owners see significant risk of policy change that would reduce future quota values. That is, they face default risk in quota ownership. T he capitalization of farm program benefits and the effects of policy on the rate of return to investments in farm assets have long been important to agricultural policy analysis. The issues arise in the context of the influence of policy on prices of farmland, other physical assets, and policy-created assets such as farm program quota. Basic economic principles tell us that the benefits of government programs will affect returns to and prices of resources connected to a program. The incidence of flow benefits depends, in part, on the elasticities of supply of these resources, with the prices of inelastic resources affected most. The capital prices of assets do not depend directly on past returns, but on expectations about future returns. Of course, in many practical cases, the history of past returns is a crucial source of information used to form expectations. Johnson assessed the literature on returns to farm quota, stating, Roughly speaking, the discount rate used to value future earnings from [farm-program created] quotas is approximately 25%. Thus, individuals who have recently

The Growing Prevalence of Emergency, Disaster, and Other Ad Hoc Farm Program Payments: Implications for Agri-Environmental and Conservation Programs

The use of emergency, disaster, and other ad hoc sources of income support to American farmers escalated dramatically between 1991 and 2002, increasing year-to-year uncertainty about the magnitude and distribution of farm program benefits. Ad hoc payment mechanisms, while meeting needs now apparently unsatisfied by other farm programs, have the potential to substitute for or conflict with agri-environmental and conservation program goals. Federal budget constraints likely make continued growth in ad hoc payment schemes unsustainable, raising questions about what will take their place. There is ample room for new research on how alternative farm program approaches and program combinations interact to affect stewardship behavior and associated agri-environmental outcomes.

Economic and Financial Viability of Residue Management: An Application to the Texas High Plains

Costs and benefits of no-tillage (NT) were analyzed and compared with conventional tillage (CT) for irrigated corn (Zea mays L.) in the northern Texas High Plains. Research results, from a 4-yr wheat (Triticum aestivum L.)/corn/fallow rotation, were used to validate the Erosion Productivity Impact Calculator (EPIC), a widely used daily time-step hydrologic and crop growth simulator. The yields generated by EPIC were used in the Farm Level Income and Policy Simulation Model (FLIPSIM), to analyze the long-term (10 yr) economics of NT and CT corn production on a whole farm basis under various irrigation strategies. The results indicated that NT increased the probability of survival for the low water irrigation strategy while increasing net cash farm income by 8,5% on the more frequent irrigations strategy. NT resulted in higher present values of ending net worth for all irrigation strategies. NT's ability to reduce water needs, decrease yield variability, and reduce machinery use (fuel, replacement, and repair costs) more than offset the increase in chemical costs associated with NT compared with CT. Research Question Economic impacts of residue management on Great Plains farmers producing irrigated crops were largely unknown when the Food Security Act of 1985 mandated that participants in farm programs who farm highly erodible cropland must implement SCS approved soil conservation farm plans by January 1995. The mandate was intended to reduce soil erosion, both by wind and water. While dryland crop production in the Great Plains often results in inadequate residue for erosion control, irrigation generally produces adequate residue for soil protection if properly managed. The threat of losing farm program benefits is a concern to both dryland and irrigated producers. The purpose of this research is to quantify the economic benefits (costs) of producing no-tillage (NT) corn for a representative feed grain farm in the northern Texas High Plains. Literature Summary Conservation tillage research in the Great Plains dates back to the 1930s. Early research investigated dryland benefits of residue management during nonuse periods, or fallow, primarily for enhancing soil water storage and reducing crop yield variability. Past research has found that NT practices increase yields proportionally more under dryland conditions than under irrigated conditions. Previous studies have also shown that furrow erosion can be reduced with NT practices, which may reduce seed bed preparation time and costs in subsequent years. Economic impacts of residue management are both short term and long term, depending largely on the immediate increase in herbicide expenses, which substitute for short-run costs of tillage, and the reduction in long-term equipment depreciation costs. Study Description Field research data is used to validate the Erosion Productivity Impact Calculator (EPIC), a widely used daily time-step hydrologic and crop growth simulator. EPIC is then used to develop long-term and stochastic corn yields for NT and conventional tillage (CT) under alternative irrigation scenarios for a representative northern Texas High Plains feed grain farm producing NT and CT corn. The stochastic yields for CT and NT corn generated by EPIC given alternative irrigation strategies are used as input into FLIPSIM. The financial outcomes of the farm for the CT and NT systems are compared to determine their impacts on the farm's long-run economic viability under alternative irrigation scenarios. Applied Questions How does NT compare with CT economically? The results of the 10-yr whole farm financial analysis indicated that NT was more profitable than CT. A reduction in expenses was the largest benefit gained from NT. The reductions included repair costs, fuel costs, irrigation costs, interest, and machinery replacement. While initial machinery debt was increased, the increase in net cash farm income and the longer useful life for machinery allowed NT to service debt faster than CT, thus decreasing interest expenses. How do the effects of NT vs. CT differ under alternative irrigation strategies? Corn yield increases and cost reduction benefits using NT are greatest for the limited water scenarios. This leads to greater increases in net cash farm income and equity growth. As the irrigation amounts increase, the need for NT as a source for maintaining soil moisture diminishes and thus NT yield benefits are diminished relative to CT at higher irrigation level.

Rural Population Decline in the 1980s: Impacts of Farm Structure and Federal Farm Programs

AbstractFederal farm program benefits accrue disproportionately to large‐scale farm operators, and continue largely because of the political influence of their beneficiaries. Some writers argue that these payments stem the movement of labor out of agriculture, ultimately reducing the pace of rural depopulation. Here, a theoretical model linking farm program payments to population loss is presented and empirically estimated for the years 1980–90. Larger farm program payments as a share of total cash marketing receipts were associated with greater population losses from rural counties. This result holds after controlling for other economic variables affecting population migration from rural areas.

An Analysis of farmers' Policy Attitudes and Preferences for Free Trade

AbstractThis study evaluates the attitudes of U.S. (Kansas) farmers regarding “free-trade” and “free-market” policy environments. In contrast to earlier studies, non-specific policy attitudes are evaluated. A direct measure of farm program benefits is also included. Attitudes vary significantly with farm and operator characteristics. Support for free trade was shown to decrease with education and experience, to increase for farms with relatively more rented land, and to increase as total farm wealth increased. Support for free-trade was also higher for crop farms. Farms receiving more government payments are less likely to favor a free-trade policy environment.

The Effects of Agricultural and Tax Policy Reform on the Economic Return to Wetland Drainage in the Mississippi Delta Region

The conversion of wetlands to cropland has been a common land use activity in many parts of the United States. Two major policy reforms occurred in the 1980s to reduce Federal incentives to drain and clear wetlands: the denial of farm program benefits to those who cleared wetlands (the swampbuster provision of the Food Security Act of 1985) and the elimination of income tax deductions for drainage expenses (enacted in the Tax Reform Act of 1986). A stochastic simulation analysis of three representative counties in Louisiana, Arkansas, and Mississippi shows that both reforms reduced the economic feasibility of wetlands conversion.

Factors influencing the economic potential for alternative farming systems: Case analyses in South Dakota

AbstractResults of calculations on the economic potential for alternative (low input, sustainable) farming systems in a small grain-row crop region of the Northern Plains are reported. Two sets of alternative farming systems, in which no chemical fertilizers or herbicides are used, are compared with various conventional and reduced till systems. In Farming Systems Study I (FSS1), an alternative rotation consisting of oats, alfalfa, soybeans, and corn is compared with conventional and ridge till rotation systems composed of corn, soybeans, and spring wheat. In Farming Systems Study II (FSS2), three systems with an emphasis on small grains are compared. An alternative system rotation consisting of oats, sweet clover, soybeans, and spring wheat is compared with conventional and minimum till rotation systems comprised of soybeans, spring wheat, and barley. Results of baseline economic analyses show that alternative farming systems can be competitive with more conventional systems in at least some situations. The alternative systems entail markedly lower direct costs, and the alternative system in FSS2 has approximately the same net returns as the comparable conventional and minimum till systems. The FSS1 alternative system has positive but somewhat lower net returns than the comparable conventional and ridge till systems. Sensitivity analyses were conducted with alternative system crop yields, chemical fertilizer and herbicide prices, and varying assumptions about future Federal farm program support levels and acreage set aside requirements. The yield sensitivity analyses show that one alternative farming system requires yields about 5–10 percent above those of the comparable conventional system to produce the same net returns. However, the other alternative system is competitive with a conventional system even with yields 5 percent lower. Analyses varying chemical fertilizer and herbicide prices reveal that the alternative farming system in FSS1 becomes competitive with more conventional systems when fertilizer and herbicide prices rise by 50 percent. The alternative farming system in FSS2 is already competitive at current fertilizer and herbicide prices. In some cases, sensitivity analyses with Federal farm program provisions indicate that reductions in farm program benefits increase the economic competitiveness of alternative farming systems. However, important exceptions occur. Results indicate that not only the level of future farm program benefits, but also the form of program provisions and compliance requirements, will affect the relative competitiveness of alternative farming systems.

Distributional Impact of Farm Programs and the Adjustment Dilemma

farm program benefits in the United States that it could be regarded as folly to raise the issue again. From the earlier work of Bonnen, Schultze, and Gardner and Hoover, to more recent analyses by Lin, Johnson, and Calvin and U.S. Congress, the distributional effects of farm programs have been widely discussed by agricultural economists. Given the history of farm policy legislation, it could be argued that the distributional question has not been a major item on the political agenda in the United States.

A Neoclassical Analysis of the U. S. Farm Sector, 1948–1970

AbstractThe impacts of major exogenous forces on the farm sector are measured using a seven equation model. Annual estimates of the parameters of an aggregate Cobb‐Douglas production function are obtained by using relative market shares. First order conditions for four groups of inputs are derived. Time series and ordinary least squares are used to estimate the supply for farm labor and the demand for farm output. Technological change, exogenous price changes, and population growth are the major exogenous influences. Roughly 90 percent of farm program benefits have accrued to landowners.

The Benefits of Farm Programs

The Benefits of Farm Programs

The Benefits of Farm Programs:*

The American Journal of Economics and SociologyVolume 26, Issue 3 p. 237-250 The Benefits of Farm Programs:* Incidence, Shifting, and Dissipation Mason Gaffney, Mason Gaffney University of Wisconsin-MilwaukeeSearch for more papers by this author Mason Gaffney, Mason Gaffney University of Wisconsin-MilwaukeeSearch for more papers by this author First published: July 1967 https://doi.org/10.1111/j.1536-7150.1967.tb01005.x * A paper delivered at the annual meetings of the American Farm Economics Association, Stillwater, Oklahoma, August, 1965. AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Volume26, Issue3July 1967Pages 237-250 RelatedInformation

Discussion: The Benefits of Farm Programs: Incidence, Shifting, and Dissipation

Discussion: The Benefits of Farm Programs: Incidence, Shifting, and Dissipation

The Benefits of Farm Programs: Incidence, Shifting, and Dissipation

T HE proximate beneficiary of most programs is the landowner per se. Farmers who are not landowners, like the migrant harvesters who get down to 25 cents an hour in some places, do not gain, but suffer from lower demand for their services. Landowners who are not farmers, such as the matinee idols, senators, industrial executives and country bankers who sink their spare change in rural real estate, benefit hugely. In the short run, some tenants with long leases, or renewable ones under custombound crop shares, may gain a good deal. But these tenants really have a species of equity in land, and it hardly rises above the dignity of a quibble to cite them to refute what is otherwise too obvious for serious question.' Agricultural economists are becoming increasingly vocal on this subject, which, as farmland values continue to soar in defiance of falling farm income, is increasingly apparent. The work inspired by Walter Chryst is outstanding. His findings really should not surprise us. The surprise is why it took the profession so long to catch up with Ricardo. In analyzing the corn laws -the price supports of his day-he made the same point, and on the side enunciated the law of rent and founded classical economics.

State Variations in Farm Program Payments

Direct payments to farmers, of some importance for more than three decades, have grown very rapidly since 1960. Payments under the wheat and feed grain programs have resulted in a substantial realignment of the states in the amount of direct payments received, and have also brought an increase in the concentration of such payments in a few states. Questions as to the equitable distribution of farm program benefits as a whole could be answered only by a detailed study of state variations in the income supporting effects of all farm programs. Direct payment programs are highly visible nevertheless, and any attempt at their greater equalization must involve either development of payment programs for other important commodities or a step-up of payments under noncommodity programs available to qualified farmers in all states.

Capitalization of Farm Program Benefits: Further Comment

Capitalization of Farm Program Benefits: Further Comment

How Much of Farm Program Benefits Are Lost to Farm Operators via Capitalization into Land Values?

How Much of Farm Program Benefits Are Lost to Farm Operators via Capitalization into Land Values?