Identifying and Reducing Overlap in Farm Program Support

Joseph Cooper () and Erik O'Donoghue

No 103261, 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association

Abstract: The current debate surrounding the 2012 Farm Act stresses cutting costs while maintaining, or even strengthening, farmers’ “safety net.” One way to cut costs is to reduce or eliminate potential overlap of farm program payments. Using simulations, we explore the interaction between the Average Crop Revenue Election (ACRE) program and a revenue assurance (RA) crop insurance program for corn, soybean, and wheat farmers in IL, MN, and SD. Additionally, we examine whether receiving benefits from multiple programs (an RA program, the Supplemental Revenue (SURE) program, and an ad hoc disaster assistance program) distorts farmers’ business decisions. We find overlap between ACRE and crop insurance, which could lead to budgetary savings if these two programs were to be integrated. Moreover, despite policymakers explicitly incorporating insurance indemnities into SURE payment calculations, access to both programs can alter behavior. Finally, in a counter-factual analysis, we show that removing ad hoc payments from the SURE would likely alter farm behavior.

Keywords: Agricultural and Food Policy; Production Economics; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 34
Date: 2011
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea11:103261

DOI: 10.22004/ag.econ.103261

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