What is in this article?:
• Explaining farm payments to the masses is a challenge.
• Agriculture economists contend it is the general public and often the media that generally misunderstand the farm subsidy payment system.
• A significant portion of the benefits of payments is captured by non-operator landlords.
Direct payments and CCPs are based on a farm’s historical production, and CCP payments also depend on current market prices. Marketing loan benefits and ACRE payments are tied to current production and market prices.
While eligibility criteria are different among programs, most commodity payments go to farmers growing (or who have historically grown) barley, corn, grain sorghum, oats, peanuts, rice, soybeans, upland cotton, wheat, and other oilseeds, collectively referred to as program crops. Furthermore, payments under several of the programs depend on whether the market price for each program crop is above or below specific levels.
While most farmers are well informed on subsidy rules, agricultural economists contend it is the general public and often the media that generally misunderstand the farm subsidy payment system and this in turn leads to misconceptions and general negativity toward farm payment programs in general.
According to the new study, it is important to note that farm operators do not receive all the benefits of commodity payments. A significant portion of the benefits of payments is captured by non-operator landlords. Although many farmers own land, roughly 55 percent of farmland and 64 percent of cropland is operated by someone other than the owner, and 94 percent of rented farm land is owned by non-farmers.
In an effort to aid producers explain government payments they receive to a non-informed public, the study points out that production of commodities has been shifting to larger farms because larger farms tend to be more profitable. According to the report, larger farms will probably continue to be more profitable, and that means commodity production is likely to continue to shift to larger farms.
Since commodity program payments are based on current or historical production, payments will continue to shift to larger farms and higher income farm households unless the design of commodity-related programs changes substantially.
Congress has created upper limits on the amount of Government program payments that can be made to an individual, as well as income eligibility caps that restrict eligibility to households with income below specified levels. The current payment limits and income eligibility caps affect few recipients and only a small share of total payments.
To view the new study, go to http://www.ers.usda.gov/AmberWaves/March12/PDF/CommodityPayments.pdf.