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Wednesday
Dec182013

CAEP Research Published in Choices Magazine

A recent study by John Antle and Laurie Houston, A Regional Look at the Distribution of Farm Program Payments and How It May Change with a New Farm Bill, was published online December 2, 2013, by Choices Magazine, the principal outreach vehicle of the Agricultural and Applied Economics Association.  In this article the authors utilize individual responses to the Agricultural Census to examine the distribution of the major types of farm program payments among four regions of the country – the Corn Belt, the Lake States, the Northern Plains and the Pacific Northwest.  Amounts and types of payments are compared in absolute terms and relative to the amount of agricultural income a farm earns. This analysis reveals some fresh insights into the distribution of farm program payments and how it could change with a new farm bill that should inform the debate about the economic effects of farm programs. One new finding is that while large farms receive a large share of farm program payments, as has been widely publicized in the news media, smaller farms often receive as much or more than large farms relative to farm income. They also find substantial differences in the importance of different types of program payments across regions and types of farms. Notably, profitable commercial farms receive a large share of “direct payments” that are likely to be substantially reduced or eliminated with new farm legislation, but may be replaced by larger crop insurance subsidies. In contrast, less profitable farms are more dependent on conservation program payments.  Also, the data show that many farms that produce livestock also receive commodity subsidies because many of them produce subsidized grain crops, and also receive substantial conservation payments. This analysis shows that the distribution of program payments is complex, varies by type of farm and region, and will depend on how major program changes, including new crop insurance provisions, will be designed and implemented.

(Supplemental figures available here.)