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Buying Time: The Effect of Market Facilitation Program Payments on the Supply of Grain Storage

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  • Swearingen, Bryn
  • Janzen, Joseph P.

Abstract

We estimate the impact that the Market Facilitation Program (MFP) payments had on farmers' willingness to store grain. Using a fixed effects model across multiple dimensions and state-level data on MFP, grain stocks, production, and export dependence, we address the role of the decrease in opportunity costs causing an increase in the willingness to store of farmers. Our analysis finds that MFP payments had a significant impact on grain storage by US farmers. In states with relatively higher payments at the marginal 10% increase in payments a 1.28% increase in on-farm inventories will occur holding all else constant. This explains that policies that increase access to financial capital can cause small increases to grain inventories.

Suggested Citation

  • Swearingen, Bryn & Janzen, Joseph P., 2021. "Buying Time: The Effect of Market Facilitation Program Payments on the Supply of Grain Storage," 2021 Conference 316399, NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    • Handle: RePEc:ags:nccc21:316399
    DOI: 10.22004/ag.econ.316399
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    References listed on IDEAS

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    1. Joseph P. Janzen & Nathan P. Hendricks, 2020. "Are Farmers Made Whole by Trade Aid?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(2), pages 205-226, June.
    2. Colin A. Carter & Cesar L. Revoredo-Giha, 2009. "Eastham's commodity storage model in a modern context," Oxford Economic Papers, Oxford University Press, vol. 61(4), pages 801-822, October.
    3. Swanson, Krista & Coppess, Jonathan & Schnitkey, Gary, . "Trade Timeline and Corn and Soybean Prices," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 8.
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