Potential Farm-Level Effects of Eliminating Direct Payments
AbstractSince 2003, direct payments have accounted for a signifi cant portion of farm program payments. If direct payments were eliminated, many agricultural producers would be affected, both through the loss of income and potential declines in land values and rental rates. This report considers the potential contribution of direct payments to farm revenues and land values across farm commodities and regions and estimates the magnitude of the financial impact on participating farms should direct payments be eliminated. Direct payments are highest relative to crop revenues in parts of the Northern Plains, Southern Plains, Mountain, Delta, and Southeast regions, and the estimated effect of direct payments on cropland values also is relatively high in many of these regions. Overall, our analysis suggests that an abrupt end to the direct payment program could reduce the number of farms with a favorable financial status (profitable farms having relatively low debt burdens) by about 11,000 nationally, or about 2 percent of farms that received direct payments in 2009. The estimated effect varies regionally and is more pronounced in the Delta and Southeast regions, where direct payments per farm tend to be higher, on average, than elsewhere.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by United States Department of Agriculture, Economic Research Service in its series Economic Information Bulletin with number 139809.
Date of creation: Nov 2012
Date of revision:
Contact details of provider:
Postal: 1400 Independence Ave.,SW, Mail Stop 1800, Washington, DC 20250-1800
Web page: http://www.ers.usda.gov/
More information through EDIRC
direct payments; farm policy; farmland values; Agricultural and Food Policy; Agricultural Finance; Land Economics/Use;
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barrett E. Kirwan, 2009.
"The Incidence of U.S. Agricultural Subsidies on Farmland Rental Rates,"
Journal of Political Economy,
University of Chicago Press, vol. 117(1), pages 138-164, 02.
- Kirwan, Barrett E., 2008. "The Incidence of U.S. Agricultural Subsidies on Farmland Rental Rates," Working Papers 42714, University of Maryland, Department of Agricultural and Resource Economics.
- Laure Latruffe & Chantal Le Mou�l, 2009. "Capitalization Of Government Support In Agricultural Land Prices: What Do We Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 659-691, 09.
- Falk, Barry L., 1991. "Formally Testing the Present Value Model of Farmland Prices," Staff General Research Papers 11093, Iowa State University, Department of Economics.
- Barry K. Goodwin & Ashok K. Mishra & Fran�ois N. Ortalo-Magné, 2003. "What's Wrong with Our Models of Agricultural Land Values?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 744-752.
- Alston, Julian M. & James, Jennifer S., 2002. "The incidence of agricultural policy," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 33, pages 1689-1749 Elsevier.
- Jean-Paul Chavas & Alban Thomas, 1999. "A Dynamic Analysis of Land Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 772-784.
- Charles B. Moss & Ani L. Katchova, 2005. "Farmland valuation and asset performance," Agricultural Finance Review, Emerald Group Publishing, vol. 65(2), pages 119-130, July.
- Kuethe, Todd & Walsh, Nicholas & Ifft, Jennifer, 2013. "Farmland versus Alternative Investments Before and After the 2008 Financial Crisis," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.