Article

Changing Farm Structure and the Distribution of Farm Payments and Federal Crop Insurance

Authors:
To read the full-text of this research, you can request a copy directly from the authors.

Abstract

The distribution of commodity-related payments and Federal crop insurance indemnities to U.S. farmers has shifted to larger farms as more and more U.S. agricultural production is done on those farms. Since the operators of larger farms tend to have higher household incomes than other farm operators, commodity-related program payments and Federal crop insurance indemnities also have shifted to higher income households. By 2009, half of commodity-related program payments went to farms operated by households earning over $89,540, a quarter went to farms operated by households with incomes greater than $209,000 and 10 percent went to farms operated by households with incomes of at least $425,000. Current income eligibility caps and payment limits affect few farm households because most of them have incomes below the income caps or receive payments less than the payment limits. Based on 2009 Agricultural Resource Management Survey (ARMS) data, recent proposals to lower those income caps and payment limits would still affect only a small percentage of U.S. farm households, because their incomes would still fall below the proposed income caps and payment limits. Total Government program payments to U.S. farms were $12.3 billion in 2009. Total Federal crop insurance indemnity payments were $5.2 billion in 2009.

No full-text available

Request Full-text Paper PDF

To read the full-text of this research,
you can request a copy directly from the authors.

... A characteristic of American agriculture is its widely-recognized shift in the structure of farming towards larger and more profitable farms due to scale economies coupled with technological change. 1 A consequence of this continuing change, which started nearly six decades ago, is that a larger share of farm output is produced on smaller share of farms [2]. Additionally, the shift over the *The views expressed are those of the author and should not be attributed to the Economic Research Service or USDA. 1 For example, a study by [1] showed that between 1991 and 2009, agricultural production shifted to larger farms. ...
... Additionally, the shift over the *The views expressed are those of the author and should not be attributed to the Economic Research Service or USDA. 1 For example, a study by [1] showed that between 1991 and 2009, agricultural production shifted to larger farms. In 1991, family farms with production of more than $1 million accounted for 21 percent of total production. ...
... A characteristic of American agriculture is its widely-recognized shift in the structure of farming towards larger and more profitable farms due to scale economies coupled with technological change. 1 A consequence of this continuing change, which started nearly six decades ago, is that a larger share of farm output is produced on smaller share of farms [2]. Additionally, the shift over the *The views expressed are those of the author and should not be attributed to the Economic Research Service or USDA. 1 For example, a study by [1] showed that between 1991 and 2009, agricultural production shifted to larger farms. In 1991, family farms with production of more than $1 million accounted for 21 percent of total production. ...
... The structure of farming in the U.S. since the early 1970s continues to change to where a larger share of farm production, in addition to the use of advanced technology and the ownership of farmland, is controlled by a few, yet increasing number of larger farming operations (Heady and Sonka 1974;Gebremedhin and Christy 1996;Ollinger, MacDonald, and Madison 2005). White and Hoppe (2012) showed that between 1991 and 2009, agricultural production shifted to larger farms. In 1991, for example, family farms with production of more than $1 million accounted for 21 percent of total production. ...
... among those farm households who are in the top income-wealth category of economic performance. These findings are not surprising as earlier studies have found, among other conclusions, a positive association between higher propensities of favorable economic outcome and older age, higher levels of education (e.g., Huffman and Lange 1989;Hoppe et al. 2005), and larger farm sizes (Perrin and Winkleman 1976;White and Hoppe 2012). Findings also indicate that older farmers, those with a college degree or beyond, and those who are inclined to layer up in the number of adopted risk management strategies are more likely to be in a performance category that favors wealth over income; i.e., in the category of 'low-income, high-wealth'. ...
Article
Data from the 2015 ARMS and a multinomial probit regression model were used in an attempt to discern the impact of socio-economic factors on the likelihood of a farm household falling in a favorable income-wealth category delineated by above-median income and wealth levels. A primary determinant considered was the number of risk management strategies utilized by the farm household. Findings indicate that farmers who layer up the adoption of risk management strategies are most likely to secure an economic performance status characterized by ‘low-income, high-wealth’. Aging farm operators and those with college education and who operate larger sized farms are found more likely to be in the top economic performance category of ‘high-income, high-wealth’.
... As most support is linked to planted or historical area, a greater share of farm programme benefits accrues to larger producers who farm more land (White and Hoppe, 2012;MacDonald et al., 2013). Since most cropland is rented, especially on larger farms, payments based on land are capitalised into land values, leading to a shift of benefits from farm operators to landowners. ...
Chapter
Full-text available
The US food and agriculture sector is innovative, competitive and export-oriented. Changes in national and global demand offer further opportunities for US agri-food products, although climate change and other resource constraints could create additional challenges, in particular in some regions. Maintaining high productivity growth, while improving the sustainable use of resources will require further innovation. In a policy environment generally favorable to investment and innovation, the strong US agricultural innovation system is expected to continue to create innovations that will be widely adopted, to the extent that these can be widely accepted.
... Further, various classes of farmers have different access to credit. Government subsidies are increasingly targeted to larger farms and higher-income households (White and Hoppe, 2012). Government subsidies both facilitate access to credit and also substitute for credit. ...
Article
Full-text available
The consolidation of the commercial banking sector may influence the viability of farms in accessing credit. I estimate the influence that changes in the level of deposits in community banks had on total agricultural sales and direct-to-consumer agricultural sales of local food between 2002 and 2012 in a five-state region containing North Dakota, South Dakota, Minnesota, Wyoming, and Montana. I find that changes in community bank deposits had a positive impact on changes in direct-to-consumer agricultural sales of local foods, while total agricultural sales may not be impacted by changes in community bank deposits.
... The largest impact was increased average farm size and escalated SER. This was consistent with anecdotal as well as empirical research (Tilman et al., 2002;White & Hoppe, 2012), suggesting that income support may not be as effective in reversing rural out-migration and sustainability of communities as originally intended. ...
Article
Full-text available
Grassland conversion to row-crop production in the north central United States has been a growing threat to socio-economic and environmental sustainability for producers, conservationists, and policy-makers alike. We used a system dynamics model of the region to forecast agriculturally driven land transformation through mid-twenty-first century. The base-case scenario projection showed that farmland area continued to increase, from under 200,000 km² to over 230,000 km². Unmitigated, the soil environmental risk (SER) of such changes reached conservative estimates of Dust Bowl-era externalities. Systems analyses show that reducing livestock production costs, doubling conservation compliance requirements, and livestock–cropping integration had the largest impact on grassland conservation and mitigating SER. The largest SER effects came from eliminating conservation incentives or raising cultivation incentives, despite improvements in reduced tillage and enhanced agronomy. Several system archetypes were identified within the policy scenarios: ‘fixes that backfire’ and ‘success-to-the-successful’. For scenarios creating favourable impacts, time delays caused some behaviours to worsen before positive gains were realized. If implemented, patience and persistence to ensure that these scenarios reach their full potential will be necessary. Our scenarios provide quantitative forecasts around measures for sustainable intensification. These projections can aid regional stakeholders in enhancing discussions currently taking place about sustainable agriculture in the region.
... The vast majority of research on farm commodity programs has focused not on rural communities, but on the direct impacts on the economic structure and welfare of farmers and the farm sector. 14 The assumption is often that impacts on farmers will have direct or indirect effects on income, employment, land prices, and patterns of land use in rural communities. Short-term benefits to many U.S. farmers from these programs have been significant (though unevenly distributed). ...
... United States support for agricultural commodity producers has shifted to crop insurance, and this trend seems set to continue under the latest farm bill. Crop insurance subsidies amounted to $0.2 billion (in 2009 dollars) on $14.3 billion in crop value in 1991 and $5.4 billion in subsidies on $79.6 billion in crop value in 2009, whereas program payments to U.S. farms summed to about $12.3 billion in 2009 (and were as high as $24 billion in 2005) (White and Hoppe, 2012). The 2012 drought decreased the national average corn yield to just over 120 bushels per acre from predrought expectations of 166 bushels per acre (Office of the Chief Economist, 2012), highlighting the risk that crop insurance policies are intended to mitigate. ...
Article
Full-text available
County-level yield data are used in applied research and crop insurance policy in place of farm-level yield data, which are likely sparse, not broadly representative, and subject to selection bias. We exploit the fact that county-level yields are the aggregate of farm-level yields to derive bounds that can be reduced to direct relationships between county- and farm-level yields under certain conditions. Simulation experiments indicate that crop insurance premium estimates derived from this method have the potential for bias in certain conditions but are reasonably precise in other conditions, suggesting that these relationships are a new tool for applied analysts.
... The count variable N (0, 1,…, 5) takes the value 0 when the farmer does not participate in farm programs, and takes a value between 1 and 5 depending on the number of types of farm programs that the farmer participates in. For example, when the number is 1, this indicates that the farmer received in 2004 farm program payments from just one source out of the following five available potential sources (for detail on these types of payments, see[26]): direct payments, counter-cyclical payments, loan deficiency payments, Conservation Reserve payments, all other remaining types of payment (e.g., state or local agricultural program payments, market loan payments, Wetland Reserve Program payments, etc.) (number of possible combinations = 5); when the number is 2, this indicates receiving payments from any two of the five available sources (number of possible combinations=10)… and lastly, when the number is 5, this indicates payments from all five sources (number of possible combinations = 1). ...
... Because of the concentration of energy payments in the Plains, many of them go to livestock producers, with roughly half of farms receiving energy payments specialized in raising beef cattle. In contrast, crop farms are more likely to receive farm program payments (White and Hoppe 2012). ...
Article
New technologies for accessing energy resources, changes in global energy markets, and government policies have encouraged growth in the natural gas and wind industries in the 2000s. The growth has offered new opportunities for wealth creation in many rural areas. At a local level, households who own land or mineral rights can benefit from energy development through lease and royalty payments. Using nationally-representative data on U.S. farms from 2011, we assess the consumption, investment, and wealth implications of the $2.3 billion in lease and royalty payments that energy companies paid to farm businesses. We estimate that the savings of current energy payments combined with the effect of payments on land values added $104,000 in wealth for the average recipient farm.
... The degree to which the threat of withheld benefits can spur conservation behavior has come under serious scrutiny given the budgetary climate and crop economic situation of the early 2010s. Due to high grain prices, direct payments, which were once a central farm program benefit and a substantial component of net farm income, have declined in economic importance in recent years (White and Hoppe 2012). Such payments have also become difficult to justify in a time of sustained high crop prices and are slated for reduction or elimination (USDA 2012). ...
Article
Full-text available
Conservation Compliance, which since its inception in 1985 has led to substantial reductions in soil erosion by linking eligibility for some Farm Bill programs to erosion control on highly erodible land, is at a critical juncture. Agricultural economic and budget factors have reduced the effectiveness of compliance incentives, and numerous groups are calling for enhancement of incentives and/or for extension of compliance beyond erosion control to cover concerns such as water quality impairment. This study analyzed survey data measuring Iowa farmers’ support for four increasingly stringent Conservation Compliance scenarios ranging from the current configuration to a requirement that all farmers control nutrient runoff regardless of participation in Farm Bill programs. Overall, the results indicate that Iowa farmers have a generally positive view of Conservation Compliance policy, both as currently configured and in potentially more stringent and extensive forms. Farmers with stronger conservationist identities and attitudes were more likely to endorse increasing the scope and stringency of Conservation Compliance, while farmers who expressed greater levels of concern about the property rights implications of government intervention and those with more productivist orientations were less likely to support such policy changes. Taken as a whole, the results suggest that most Iowa farmers think that Conservation Compliance is a good idea, should be continued, and should be extended to more farmers and other resource concerns.
... Larger farms of most types are more likely to receive payments and tend to receive larger payments, although these payments are a smaller percentage of these farms' gross income. When prices are low, payments per farm and payments' share of gross cash farm income are higher, and a larger proportion of farms receive payments (Mishra et al., 2002;White and Hoppe, 2012). Table 1 reports some statistics regarding average net cash farm income, direct payments, and counter-cyclical payments received by farm households. ...
Article
In the past three decades, farm families have relied on government payments and off‐farm income to reduce income risk and increase total household income. Studies have shown that, as the income effect dominates, government payments tend to reduce off‐farm labor of farm operators and spouses. But that may not be true if one accounts for fringe benefits associated with off‐farm employment. Additionally, with looming budget deficits and the possibility of a reduction in decoupled government payments, farm families may be facing an altered economic environment. Our study addresses this issue by examining the links between government farm program payments and the ever‐important role of fringe benefits in the off‐farm employment of farm couples. Results from farm‐level data actually show that the marginal effect of government payments on hours worked off‐farm will decrease in magnitude when accounting for fringe benefits, ceteris paribus. These results support the notion that farm households’ welfare loss stemming from reduced decoupled payments may be overstated when models exclude fringe benefits from the estimation of off‐farm labor supply.
... The variable Y k represents the respective quantities of all cash grains and cash grains excluding corn outputs. Cash grain farms tend to receive significant farm program payments and be less reliant on labor as a result of the increasing use of specialized machinery (White and Hoppe, 2012). Additionally, empirical evidence shows that the operators and spouses of cash grain farms have a higher likelihood of participating in off-farm work (Ahearn, El-Osta, and Dewbre, 2006). ...
Article
The substitution of capital for labor and new labor-saving technologies has reduced the labor required for farming, yet many farms today depend on hired labor in some form. Common in the literature is the assumption of perfectly substitutable farm labor. This has implications for the operator’s off-farm labor decision. Intuitively, different forms of farm labor have different impacts on production. We use the Agricultural and Resource Management Survey to estimate the elasticity of substitution between hired and family labor. The results provide little evidence to support the popular homogeneity assumption and find labor can be unitary and complimentary under certain scenarios.
... The largest impact was increased average farm size and escalated SER. This was consistent with anecdotal as well as empirical research (Tilman et al., 2002;White & Hoppe, 2012), suggesting that income support may not be as effective in reversing rural out-migration and sustainability of communities as originally intended. ...
Conference Paper
From 1997 to 2007, 9.6 million hectares of grassland were converted to cropland and fifty seven percent of these conversions occurred in the Northern Great Plains (NGP). Since 2007, another 9.5 million U.S. hectares have been converted with the majority located in the NGP. Short-term, positive benefits include increased food production and higher financial returns to farmers. However, there could be unintended consequences through loss of ecosystem services. Consequences may include compromised water quality, wildlife habitat loss/fragmentation, and decreased carbon sequestration. The principal objective of this work is to: 1) identify structural features influencing land use decisions through agricultural stakeholder engagement; and 2) to synthesize results into a causal loop diagram through a group model building process. This information can be used to construct a stock-flow model to quantify implications for land management, forecast potential unintended consequences from major land use changes, and develop strategies to minimize their impacts.
... The multiple-peril Federal Crop Insurance Program (FCI), administered by USDA's Risk Management Agency, has yield and revenue policies, with premiums subsidized 38-67% to encourage participation. 41 FCI covers more than 80% of major field crop acreage (ERS, USDA (http://www.ers.usda.gov/topics/farmpractices-management/risk-management/governmentprograms-risk.aspx). The Noninsured Crop Disaster Assistance Program provides catastrophic coverage for crops and locations not covered by FCI for a nominal fee. ...
Article
Background: This paper discusses U.S. agricultural pesticide use trends from 1964 to 2010 based on estimates developed from USDA surveys, and the influence of economic factors, agricultural policy, and pesticide regulation on aggregate quantities and mix of pesticides used. Results: Synthetic organic pesticide use grew dramatically from the 1960s to the early 1980s, as farmers treated more and more acreage. Use then stabilized, with herbicides applied to about 95% of corn, cotton, and soybean acres, annually. Subsequently, major factors affecting trends were: (1) changes in crop acreage and other economic factors, (2) use of new pesticides that reduced per-acre application rates and/or met more rigorous health and environmental standards, and (3) adoption of genetically engineered insect-resistant and herbicide-tolerant crops. Conclusion: The use of pesticides and other control practices responded to economic factors such as input and output markets and agricultural policies. Changing societal values toward pesticide risks and benefits profoundly affected pesticide policy, influencing the pesticides available for use, but only indirectly affecting aggregate quantities used. While the current pesticide regulatory process might have economic inefficiencies, it might be consistent with policy preferences held by much of the public-to reduce pesticide hazards rather than minimize regulatory costs.
Article
Research using the Agricultural Resource Management Survey (ARMS) and other data shows that direct government payments to farmers increase rents and the price of land. However, some ARMS data is imputed and does not account for relationships between payments and other variables. We investigate various imputation methods and benefits gained from a method with a wide scope rather than a parsimonious range of variables. Using our method, we estimate that an additional dollar of direct payment increases land value about $2.69 more per acre than ARMS imputation methods and that our imputations (using an exhaustive iterative sequential regression) outperform other methods and/or smaller models. Copyright 2014 Northeastern Agricultural and Resource Economics Association
Article
Purpose – For over 20 years, decoupled agricultural support programs have played a large role in farm policy. The purpose of this paper is to investigate the effects of decoupled agricultural support payments on farm-level debt. Design/methodology/approach – A two-stage least squares model is used to estimate the impact of decoupled payments, farm production characteristics, demographics, regional risk factors, as well as cross-sectional and temporal fixed effects on farm debt, along with weather-related instrumental variables. Findings – Results indicate that a negative and statistically significant relationship exists between decoupled payments and farm debt. This study also provides evidence that research results not accounting for the endogenous relationship between acres operated and farm-level debt should be interpreted with caution. Research limitations/implications – The constantly changing sets of policy options provide a challenge in identifying the impact of a single policy, ceteris paribus. Therefore, one notable limitation is in extrapolating the results in this study to make implications on the elimination of the direct payments program, as part of the 2014 Farm Bill. Practical implications – This implies that farmers likely use annual decoupled payments to reduce their debt, potentially influencing their exposure to financial risks, capacity to withstand financial instability, and access to credit. The methodology used may establish a foundation for continued research that seeks to empirically identify and measure the complex interrelationships among agricultural public policies and farm-level financial measures. Social implications – Decoupled payment programs may indirectly influence debt decisions, which can influence production decisions in the long run. Originality/value – In order to accurately identify the impact of direct payment programs on farm debt levels, this study is the first of its kind to account for the endogenous relationship between production decisions and debt and use a large unbalanced panel of data available from the Agricultural Resource Management Survey.
Article
Full-text available
Under the Food, Conservation, and Energy Act of 2008 (Farm Act), U.S. farms with 10 or fewer base acres became ineligible to receive Direct and Countercyclical Payment (DCP) or Average Crop Revenue Election (ACRE) program payments(Section 1101(d) and 1302(d)) from USDA. Limited resource and socially disadvantaged owners are exempt from this “base 10” provision. Eliminating payments on farms with 10 or fewer base acres reduces payments made by USDA Farm Service Agency (FSA) and the cost of administering the DCP and ACRE programs. We examine the characteristics of the farms affected by the limited base acre provision and answer the question: How does the provision affect small farms?
Article
Full-text available
All three measures of U.S. farm income are projected to decline in 2009—net farm income is projected to decline by 34.5 percent, net cash income by 28.4 percent, and net value added by 20 percent. Considerable uncertainty surrounds the forecasts of farm assets, debt, and equity in 2009, given the volatility of commodity, energy/input, and fi nancial markets. The overall level of farm-business equity capital is expected to fall in 2009, as farm-sector asset values decline by 3.5 percent. Farm debt is expected to remain steady at $239 billion in 2009. Farm fi nancial ratios monitoring liquidity, effi ciency, solvency, and profi tability show that the sector's fi nancial performance in 2008-09, while slightly worse than in 2007, is quite favorable overall when compared to the 1980s and 1990s. Average net cash income for farm businesses (intermediate and commercial operations, including non-family farms) is projected to be $61,578 in 2009. This would be 10.6 percent below the 2008 estimate of $68,876. The projected change in income prospects for farm businesses will not affect all farm operations in the same manner or to the same degree. In 2009, the largest declines in farm-business income are forecast for livestock farms, particularly dairy. Farm-operator household income is forecast to be $76,065, down 3.5 percent from 2008. Household earnings from off-farm sources are projected to be similar to 2008.
Article
Full-text available
Who benefits from agricultural subsidies is an open question. Economic theory predicts that the entire subsidy incidence should be on the farmland owners. Using a complementary set of policy quasi experiments, I find that farmers who rent the land they cultivate capture 75 percent of the subsidy, leaving just 25 percent for landowners. This finding contradicts the prediction from neoclassical models. The standard prediction may not hold because of less than perfect competition in the farmland rental market; the share captured by landowners increases with local measures of competitiveness in the farmland rental market. (c) 2009 by The University of Chicago. All rights reserved..
Article
Full-text available
This paper analyses how farm access to credit affects farm input allocation and farm efficiency in the CEE transition countries. Drawing on a unique farm level panel data with 37,409 observations and employing a matching estimator we are able to control for the key source of endogeneity – unoberserved heterogeneity. We find that farms are credit constrained both in the short-run as well as in the long-run, but that credit constraint is asymmetric between inputs. Our estimates suggest that farm access to credit increases TFP up to 1.9% per 1000 EUR of additional credit. The use of variable inputs and capital investment increases up to 2.3% and 29%, respectively, per 1000 EUR of additional credit. Due to credit-financed investment in labour-saving farm equipment, labour use reduces for low level of credit. Farms are found not to be credit constrained with respect to land.
Article
Full-text available
Use of crop biotechnology products, such as genetically engineered (GE) crops with input traits for pest management, has risen dramatically since commercial approval in the mid-1990s. This report addresses several of the economic dimensions regarding farmer adoption of bioengineered crops, including herbicidetolerant and insect-resistant varieties. In particular, the report examines: (1) the extent of adoption of bioengineered crops, their diffusion path, and expected adoption rates over the next few years; (2) factors affecting the adoption of bioengineered crops; and (3) farm-level impacts of the adoption of bioengineered crops. Data used in the analysis are mostly from USDA surveys.
Article
Full-text available
Crop production is shifting to much larger farms. Since government commodity payments reflect production volumes for program commodities, payments are also shifting to larger farms. In turn, the operators of very large farms have substantially higher household incomes than other farm households, and as a result government commodity payments are also shifting to much higher-income households. Since the changes in farm structure appear to be ongoing, commodity payments will likely, under current policies, continue to shift to higher income households. This brief uses 2003 Agricultural Resource Management Survey (ARMS) data to detail the shifts.
Article
Full-text available
Farming is in the midst of a major transformation—not only in technology and production practices, but also in size of business, resource (land) control and operation, business model and linkages with buyers and suppliers. This paper describes the fundamental drivers of today’s structural change in U.S. agriculture. The impact of the drivers are illustrated by describing some illustrations of the kinds of innovative farming operations that are developing in agriculture, not the typical farms but those who appear to be leading and shaping the new agriculture. Finally, farm policy implications of the transformation of farming to an industrial manufacturing model are discussed.
Article
Meeting agricultural policy and statistical goals requires a definition of U.S. agriculture's basic unit, the farm. However, these goals can be at odds with one another. USDA defines farm very broadly to comprehensively measure agricultural activity. Consequently, most establishments classified as farms in the United States produce very little, while most production occurs on a small number of much larger operations. While desirable for obtaining comprehensive national coverage, measurement and analysis based on the current definition can provide misleading characterizations of farms and farm structure in the United States. Additionally, more stringent requirements have been proposed for farms to qualify for Federal agricultural program benefits. This analysis outlines the structure of U.S. farms, discusses the current farm definition, evaluates several potential criteria that have been proposed to define target farms more precisely, and examines how these criteria affect both statistical coverage and program eligibility.
Article
The U.S. has a long history of providing generous support for the agricultural sector. A recent omnibus package of farm legislation, the 2008 Farm Bill (P.L. 110-246) will provide in excess of $284 billion in financial support to U.S. agriculture over the 2008-2012 period. Commodity program payments account for $43.3 billion of this total. Our paper is concerned with the distribution of these benefits. Farm subsidies make agricultural production more profitable by increasing and stabilizing farm prices and incomes. If these benefits are expected to persist, farm land values should capture the subsidy benefits. We use a large sample of individual farm land values to investigate the extent of this capitalization of benefits. Our results confirm that subsidies have a very significant impact on farm land values and thus suggest that landowners are the real benefactors of farm programs. As land is exchanged, new owners will pay prices that reflect these benefits, leaving the benefits of farm programs in the hands of former owners that may be exiting production. Approximately 45% of U.S. farmland is operated by someone other than the owner. We report evidence that owners benefit not only from capital gains but also from lease rates which incorporate a significant portion of agricultural payments even if the farm legislation mandates that benefits must be allocated to producers. Finally, we examine rental agreements for farmers that rent land on both a cash and share basis. We find evidence that farm programs that are meant to stabilize farm prices provide a valuable insurance benefit.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
Article
The current $2.5-million income cap on eligibility for farm program payments affects only a small number of farm program payment recipients each year. A reduction in the cap to $200,000 would affect a larger number of farm households but still only a small share of recipients. Based on IRS tax data for 2004, about 1.2 percent of all farm sole proprietors and about 2 percent of crop share landlords would be potentially subject to the proposed lower adjusted gross income (AGI) cap. ARMS survey data suggest a similar share of farm sole proprietors (1.1 percent) could be affected. When partnerships and farm corporations are included, about 1.5 percent of all farm operator households could be affected because a larger share of farm partnerships (2.5 percent) and farm corporations (9.7 percent) could be subject to the proposed cap. ARMS data indicate that $807 million in payments were received in 2004 by farm operators organized as proprietors, partnerships, and corporations with incomes exceeding $200,000. However, not all of these payments would be affected by a $200,000 income cap on eligibility for payments due to differences in IRS and ARMS data and changes by producers in how they manage their incomes and expenses. The study also found that farm income averaged $271,749 and net worth averaged over $1.86 million for farm households with AGI estimated to be over $200,000 based on the ARMS data.
Article
Most farms in the United States—98 percent in 2003—are family farms. They are organized as proprietorships, partnerships, or family corporations. Even the largest farms tend to be family farms, although they are more likely to have more than one operator. Very large family farms and nonfamily farms account for a small share of farms but a large—and growing—share of farm sales. Small family farms account for most of the farms in the United States but produce a modest share of farm output. Median income for farm households is 10 percent greater than the median for all U.S. households, and small-farm households receive substantial off-farm income. Many farm households have a large net worth, reflecting the land-intensive nature of farming.
Article
Rising food demand, increased energy costs, a weak U.S. dollar, and other factors contributed to the rapid escalation of food commodity prices until July 2008.
Article
Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Economics, 2004. Includes bibliographical references (p. 35-36). This paper identifies the effect of agricultural subsidies on farmland rental rates in the United States. Rental agreements are primarily between farmers and non-farmer landlords, but no evidence exists concerning the incidence of subsidies on these two groups. By exploiting a unique policy change in 1996 and a nationally representative dataset of individual farms, I solve the endogeneity problem with fixed effects and instrumental variables techniques. I show that non-farmer landlords capture forty percent of the marginal subsidy dollar per acre. This finding is in sharp contrast to the basic assumptions in the literature that suggest full incidence on the landlords. I discuss possible characteristics of the farmland rental market that would result in less than perfect incidence. by Barrett E. Kirwan. S.M.
Article
Payment limits have played an important role in U.S. farm policy deliberations for the last thirty years. Current limits are largely nonbinding. Proposals to strengthen and enforce limits are currently in discussion. We evaluate the likely effects of such proposals on acreage for corn, soybeans, wheat, cotton, and rice in several important producing states. Our results generally indicate that payment limits are unlikely to significantly affect acreage in most cases; exceptions occur for cotton and rice, where the probability that limits would be binding is much greater and thus more likely to affect production.
Article
The 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.
Agricultural Resource Management Survey; and U.S. Department of Commerce, U.S. Census Bureau, Current Population Survey for all U.S. households An Analysis of the Limited Base Acre Provision of the 2008 Farm Act Forces Affecting Change in Crop Production Agriculture
  • Arriola
  • Barry Christine
  • Krissoff
Source: USDA, National Agricultural Statistics Service and Economic Research Service, 1991 Farm Costs and Returns Survey and 1997, 2003, 2007, 2008, and 2009 Agricultural Resource Management Survey; and U.S. Department of Commerce, U.S. Census Bureau, Current Population Survey for all U.S. households. References Arriola, Christine, Barry Krissoff, Edwin Young, Joy Harwood, and Chengxia You. An Analysis of the Limited Base Acre Provision of the 2008 Farm Act, EIB-84, USDA, Economic Research Service, October 2011. Bechdol, Elizabeth, Allan Gray, and Brent Gloy. " Forces Affecting Change in Crop Production Agriculture, " Choices, 2010, 25(4).
Emergency Funding for Agriculture: A Brief History of Supplemental Appropriations, FY 1989-FY 2009. RL31095, Congressional Research Service
  • Ralph M Chite
Chite, Ralph M. Emergency Funding for Agriculture: A Brief History of Supplemental Appropriations, FY 1989-FY 2009. RL31095, Congressional Research Service. January 2010.
U.S. Crop Insurance: Premiums, Subsidies & Participation Agricultural Outlook
  • Dismukes
  • Monte Robert
  • Vandeveer
Dismukes, Robert, and Monte Vandeveer. " U.S. Crop Insurance: Premiums, Subsidies & Participation, " Agricultural Outlook, USDA, Economic Research Service. December 2001.
Effects of Reducing the Income Cap on Eligibility for Farm Program Payments, EIB-27, USDA, Economic Research Service Adoption of Bioengineered Crops
  • Durst
  • Fernandez-Cornejo
  • William D Jorge
  • Mcbride
Durst, Ron L. Effects of Reducing the Income Cap on Eligibility for Farm Program Payments, EIB-27, USDA, Economic Research Service. September 2007. Fernandez-Cornejo, Jorge, and William D. McBride. Adoption of Bioengineered Crops, AER-810, USDA, Economic Research Service. May 2002.
Structure and Finances of U.S. Farms: Family Farm Report, 2010 Edition, EIB-66, USDA, Economic Research Service Changing Farm Structure and the Distribution of Farm Payments and Federal Crop Insurance / EIB-91 Economic Research Service Growing Farm Size and the Distribution of Farm Payments
  • Robert A Hoppe
  • David E Banker
Hoppe, Robert A., and David E. Banker. Structure and Finances of U.S. Farms: Family Farm Report, 2010 Edition, EIB-66, USDA, Economic Research Service. July 2010. Changing Farm Structure and the Distribution of Farm Payments and Federal Crop Insurance / EIB-91 Economic Research Service/USDA MacDonald, James, Robert A. Hoppe, and David E. Banker. Growing Farm Size and the Distribution of Farm Payments EB-6, USDA, Economic Research Service. March 2006.
Agriculture Payment Limits for Farm Commodity Programs: Issues and Proposals, CRS Report for Congress, Congressional Research Service
  • Monke
  • Jim
Monke, Jim. Agriculture Payment Limits for Farm Commodity Programs: Issues and Proposals, CRS Report for Congress, Congressional Research Service. October 2005.
Federal Crop Insurance: Background and Issues, CRS Report for Congress, Congressional Research Service
  • Shields
  • Dennis
Shields, Dennis A. Federal Crop Insurance: Background and Issues, CRS Report for Congress, Congressional Research Service. December 2010.
Structure and Finances of U.S. Farms
  • Robert A Hoppe
  • David E Banker
Hoppe, Robert A., and David E. Banker. Structure and Finances of U.S. Farms: 2005 Family Farm Report. EIB-12, USDA, Economic Research Service. May 2006.
Crop Insurance: Premiums, Subsidies & Participation
  • Robert Dismukes
  • Monte Vandeveer
Dismukes, Robert, and Monte Vandeveer. " U.S. Crop Insurance: Premiums, Subsidies & Participation, " Agricultural Outlook, USDA, Economic Research Service. December 2001.
An Analysis of the Limited Base Acre Provision of the 2008 Farm Act, EIB-84
  • Christine Arriola
  • Barry Krissoff
  • Edwin Young
  • Joy Harwood
  • Chengxia You
Arriola, Christine, Barry Krissoff, Edwin Young, Joy Harwood, and Chengxia You. An Analysis of the Limited Base Acre Provision of the 2008 Farm Act, EIB-84, USDA, Economic Research Service, October 2011.
  • Robert Dismukes
  • Monte Vandeveer
Dismukes, Robert, and Monte Vandeveer. "U.S. Crop Insurance: Premiums, Subsidies & Participation," Agricultural Outlook, USDA, Economic Research Service. December 2001.
Adoption of Bioengineered Crops, AER-810, USDA, Economic Research Service
  • Jorge Fernandez-Cornejo
  • William D Mcbride
Fernandez-Cornejo, Jorge, and William D. McBride. Adoption of Bioengineered Crops, AER-810, USDA, Economic Research Service. May 2002.
  • Barry K Goodwin
  • K Ashok
  • François Mishra
  • Ortalo-Magné
Goodwin, Barry K., Ashok K. Mishra, and François Ortalo-Magné. The Buck Stops Where? The Distribution of Agricultural Subsidies, National Bureau of Economic Research Working Paper 16693. January 2011.
Structure and Finances
  • Robert A Hoppe
  • David E Banker
Hoppe, Robert A., and David E. Banker. Structure and Finances of U.S. Farms: 2005 Family Farm Report. EIB-12, USDA, Economic Research Service. May 2006.
Economic Analysis of Base Acre and Payment Yield Designations Under the
  • C Young
  • David W Edwin
  • Paul C Skully
  • Linwood Westcott
  • Huffman
Young, C. Edwin, David W. Skully, Paul C. Westcott, and Linwood Huffman. Economic Analysis of Base Acre and Payment Yield Designations Under the 2002 U.S. Farm Act, ERR-12, USDA, Economic Research Service. September 2005.