Economic Analysis of Base Acre and Payment Yield Designations Under the 2002 U.S. Farm Act
AbstractThe 2002 Farm Act provided farmland owners the opportunity to update commodity program base acres and payment yields used for calculating selected program benefits. Findings in this report suggest that farmland owners responded to economic incentives in these decisions, selecting those options for designating base acres that resulted in the greatest expected flow of program payments. Decisions of farmland owners in South Dakota, in upland cotton area, and in the Heartland region support the payment-maximization argument. In general, landowners favored maximizing payments over aligning base acres to current or recent plantings. Farmland owners with high-payment base acres, such as rice and cotton, held on to these base acres and, whenever possible, expanded them. Analogously, landowners with low-payment commodity base acres, such as oats and barley, switched to higher payment commodities whenever possible.
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Bibliographic InfoPaper provided by United States Department of Agriculture, Economic Research Service in its series Economic Research Report with number 33594.
Date of creation: 2005
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base; 2002 Farm Act; direct payments; counter-cyclical payments; production flexibility contract payments; base acres; program yields; Agricultural and Food Policy; Farm Management;
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