The Incidence of U.S. Agricultural Subsidies on Farmland Rental Rates

Barrett Kirwan

No 42714, Working Papers from University of Maryland, Department of Agricultural and Resource Economics

Abstract: Each year U.S. farmers receive more subsidies than needy families receive through welfare assistance or post-secondary students receive through student aid grants. Yet, who benefits from agricultural subsidies is an open question. Economic theory predicts the entire subsidy incidence should be on the farmland owners. Since non-farmers own nearly half of all farmland, this implies that a substantial portion of all subsidies accrue to non-farmers while a significant share of all farmers receive no benefits. Using a complementary set of policy quasiexperiments, 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 due to less than perfect competition in the farmland rental market; the share captured by landowners increases with local measures of competitiveness in the farm land rental market.

Keywords: Agricultural and Food Policy; Environmental Economics and Policy; Land Economics/Use (search for similar items in EconPapers)
Pages: 34
Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://ageconsearch.umn.edu/record/42714/files/08-08.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:umdrwp:42714

DOI: 10.22004/ag.econ.42714

Access Statistics for this paper

More papers in Working Papers from University of Maryland, Department of Agricultural and Resource Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().