EconPapers    
Economics at your fingertips  
 

The 1996 Federal Agriculture Improvement and Reform Act: Correcting a Distortion?

Nigel Key, Ruben N. Lubowski and Michael Roberts ()

No 20128, 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This study makes use of farm-level data from the Agricultural Census to evaluate the effects of the 1996 Federal Agriculture Improvement and Reform (FAIR) Act, which intended to "decouple" commodity payments from production decisions. Prior to this Act, agricultural support payments were linked to production decisions via prices and a complex set of restrictions that acted to control the supply of agricultural commodities. We compare farm-level 1992-to-1997 changes in commodity crop plantings of farms that participated in government programs with farms that did not participate. We find that the growth rate of program-crop acreage of non-participants was 19 percentage points below that of participants. This estimated difference remains unchanged after we account for unobserved effects relating to farm size, type, location, and interactions of these factors using over 1900 fixed-effects variables. These results may imply that program participation rules associated with pre-1996 programs effectively acted to limit program acreage in 1992. An alternative explanation is that payments associated with decoupled programs instituted with the 1996 Act were in fact distortionary and induced farmers to produce more than they would have without the payments. Additional research would be needed to test these competing theories.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 28
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
https://ageconsearch.umn.edu/record/20128/files/sp04ke01.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea04:20128

DOI: 10.22004/ag.econ.20128

Access Statistics for this paper

More papers in 2004 Annual meeting, August 1-4, Denver, CO from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().

 
Page updated 2021-01-16
Handle: RePEc:ags:aaea04:20128