A Risk-Adjusted Comparison of Conservation Reserve Program Payments Versus Production Payments for a Corn-Soybean Farmer

Gregory Ibendahl ()

Journal of Agricultural & Applied Economics, 2004, vol. 36, issue 2, pages 425-434

Abstract: Conservation Reserve Program (CRP) payments amount to several billion dollars annually. Payments are allocated to both remove land from production and to help farmers pay for conservation improvements. However, research examining whether farmers increase their utility with CRPs is limited. This paper uses simulation analysis and certainty equivalents to compare farming income to payments under the CRP. Farming income is a combination of crop production and government payments as specified in the 2002 Farm Bill. This analysis focuses on farms in three different counties in Kentucky. Results indicate CRPs are good choices for many farmers.

Keywords: certainty equivalents; conservation; CRP; government payments; risk; simulation (search for similar items in EconPapers)
JEL-codes: Q15 Q18 Q16 C15 (search for similar items in EconPapers)

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Journal of Agricultural & Applied Economics is edited by Jeffrey M. Gillespie

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