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Decoupled Direct Payments Under Base Acreage and Yield Updating Uncertainty: An Investigation of Agricultural Chemical Use AgEcon
Peckham, Janet G.; Kropp, Jaclyn D..
Decoupled payments were thought to have minimal impacts on current production decisions and input use. However, the literature has identified several mechanisms through which decoupled payments become coupled. We analyze the effects of uncertainty regarding future policy changes on farm-level production decisions and input use, focusing on farmers’ expectations of base acreage and yield updating. Using farm-level data, we find positive relationships between both decoupled and other government payments and real per acre expenditures on agricultural chemicals. Furthermore, there is evidence that decoupled payments may affect the intensive margin more than other government payments.
Tipo: Conference Paper or Presentation Palavras-chave: Coupling; Decoupled payments; Input use; Intensive margin; Updating; Agricultural and Food Policy; Risk and Uncertainty; Q12; Q18.
Ano: 2010 URL: http://purl.umn.edu/61214
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Decoupled Payments and Agricultural Policy Reform in Korea AgEcon
Lim, Song-Soo.
Abolishing a nearly 50-year-old policy for rice price support, Korea adopted a new direct payment program in 2005. Making the transition to decoupled income payments has been governed by the need for operative and effective income safety nets and the WTO disciplines on domestic support. The program aims to deal with over-supply of rice while guarding against the threat of income insecurity. Integrated into a target price mechanism, the fixed and variable payments compensate part of farm income loss arising from adverse market conditions. Besides, the government launched a public stockholding measure to ensure food security. A review of previous studies highlights the fixed payment has no or at most minimal effects on production while the variable payment...
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Direct payments; Policy reform; Rice; Korea; Agricultural and Food Policy.
Ano: 2007 URL: http://purl.umn.edu/9755
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Decoupled Payments to EU Farmers, Production, and Trade: An Economic Analysis for Germany AgEcon
von Witzke, Harald; Noleppa, Steffen; Schwarz, Gerald.
After an extended process of reform the European Union has introduced direct payments to farmers which are decoupled from production decisions as a central element of its Common Agricultural Policy. They are also referred to as Single Farm Payments. In this paper we analyze the production and trade effects of this policy and its compatibility with WTO international trade rules. A survey of the literature suggests that the system of direct payments in its present form has effects which are analogous to a subsidization of agricultural land. Thus, they act to increase production and trade. Furthermore we quantify the total economic cost of production of selected commodities in the European Union and compare them to the price at which EU production is sold in...
Tipo: Working or Discussion Paper Palavras-chave: European Union; Common Agricultural Policy; WTO rules; Decoupled payments; Agribusiness; Agricultural and Food Policy; Food Security and Poverty; International Development; International Relations/Trade; Risk and Uncertainty.
Ano: 2010 URL: http://purl.umn.edu/59853
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Do Decoupled Payments Stimulate Production? Estimating the Effect on Program Crop Acreage Using Matching AgEcon
Key, Nigel D.; Roberts, Robert J..
This study uses matching to evaluate the effect of decoupled payments on the acreage response of Iowa farmers who were in business in 1997 and 2002. Using farm-level panel data from the U.S. Agricultural Census, we examine whether farmers receiving high levels of 1997 agricultural payments per acre had a greater increase in program crop acreage between 1997 and 2002 than farmers receiving low levels of payments. The panel data set allows for conditioning current acreage on past individual acreage and operator characteristics. The large and exhaustive sample allows for comparisons across similar farms. The matching methodology avoids distributional and functional form assumptions about the relationship between the treatment and outcome. Results are...
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Supply response; Government payments; Program crops; Trade policy; Agricultural and Food Policy; Crop Production/Industries; Production Economics.
Ano: 2008 URL: http://purl.umn.edu/6072
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Effect of Decoupled Payments on U.S. Agricultural Production AgEcon
Kim, Tae-Hun.
In the current WTO negotiations, the developing and the developed countries take opposite view regarding the criteria for green box subsidies supposed to be decoupled from current production levels and prices. This study investigates whether U.S. PFC and direct payment subsidies are truly decoupled from production or not by modeling the farmers' risk attitudes in a non-structural approach and estimating the effect of decoupled payments on production by the change in risk attitudes. The effect of decoupled payments is not only statistically insignificant on corn and soybean acreage but also very small in magnitude.
Tipo: Journal Article Palavras-chave: Decoupled payments; PFC payments; Risk attitude; Nonstructural approach; Agribusiness; Agricultural and Food Policy; Agricultural Finance; Community/Rural/Urban Development; International Relations/Trade.
Ano: 2008 URL: http://purl.umn.edu/45684
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EX-ANTE EVALUATION OF AGRI-ENVIRONMENTAL SCHEMES: COMBINING ELEMENTS OF PRIVATE AND PUBLIC DECISION MAKING AgEcon
Bartolini, Fabio; Gallerani, Vittorio; Viaggi, Davide.
The objective of this paper is to set a complete ex-ante evaluation to support Decision Makers in designing more efficient and effective agri-environmental contracts, through an integrated modelling of elements of private and public decision making. Ex-ante comparison of policy design options in terms of overall effectiveness requires both simulations of farmers' behaviour and evaluation of the farms simulations outcomes. An intermediate step is the aggregation of single farms impacts at territorial level, in order to identify the aggregate impact of each alternative. Alternatives are several contract design, based on different levels of payments. Farm level analysis is based on a real options approach including in the simulations the timing of choice and...
Tipo: Conference Paper or Presentation Palavras-chave: Agri-environmental schemes; Real Options; Investments; Decoupled payments; Uncertainty; Agricultural and Food Policy; Environmental Economics and Policy; Risk and Uncertainty.
Ano: 2008 URL: http://purl.umn.edu/6639
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Farmers' Crop Acreage Decisions in the Presence of Credit Constraints: Do Decoupled Payments Matter? AgEcon
Girante, Maria Joana; Goodwin, Barry K.; Featherstone, Allen M..
While in theory decoupled payments do not distort production decisions, in practice there are several potential coupling mechanisms for these payments. We use farm-level data from Kansas to revisit the issue of how (de)coupled are these supposedly “decoupled” payments by focusing on how they may impact production through credit constraints. In particular, we study how production effects may have differed across farmers with varying levels of debt pressure. Our empirical approach exploits the fact that we can observe the same farm over time (and so can account for the effects of time-constant omitted variables) to study how these payments affected total crop acres, owned acres, and the decisions to plant corn, sorghum, soybeans and wheat. Like previous...
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Credit constraints; Agricultural Finance; Q17; Q18.
Ano: 2008 URL: http://purl.umn.edu/6335
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How Coupled are Decoupled Farm Payments? A Review of Coupling Mechanisms and the Evidence AgEcon
Bhaskar, Arathi; Beghin, John C..
This survey paper explores the literature on decoupling of farm programs that has emerged in the last 10 years. The paper identifies and assesses the various channels of potential coupling of decoupled farm payments and provides taxonomy of coupling mechanisms found in theoretical and empirical papers. Coupling of decoupled payments is pervasive but effects when measurable are small, with the exception of the impact on land values. The paper points to unresolved issues on potential coupling mechanisms for further research.
Tipo: Working or Discussion Paper Palavras-chave: Decoupling; Decoupled payments; Farm policy; Agricultural trade policy; Coupling; Direct payments; CCP; PFC; SFP; Agricultural and Food Policy; Agricultural Finance; Q17; Q18.
Ano: 2007 URL: http://purl.umn.edu/7347
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How Much Do Decoupled Payments Affect Production? An Instrumental Variable Approach with Panel Data AgEcon
Weber, Jeremy G.; Key, Nigel D..
Agricultural support payments that cause no or minimal production distortions are exempt from World Trade Organization restrictions. If and how much decoupled payments, such as direct payments in the U.S., affect agricultural production remains an open empirical question with implications for policy. We use multiple years of the Census of Agriculture to estimate the aggregate supply response to changes in direct payments. To identify an exogenous source of variation in payments we exploit a provision of the 2002 Farm Act that departed from previous policy by making oilseeds eligible for direct payments, thus increasing payments to areas that historically produced more oilseeds. Using a sample of ZIP codes that accounts for more than eighty percent of the...
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Supply response; Government payments; Program crops; Trade policy; Agricultural and Food Policy; Crop Production/Industries; International Relations/Trade.
Ano: 2011 URL: http://purl.umn.edu/103455
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Impact of Program Payments on Time Allocation and Farm Household Income AgEcon
Dewbre, Joe; Mishra, Ashok K..
Using a model farm household resource allocation and data from the USDA-ERS Agricultural Resources Management Survey (ARMS), this study compares the effects of various categories of farm program payments on time allocation by farm operators and spouses. Results suggest that agricultural market transition payments (AMTA) increase leisure hours of both farm operators and spouses. Loan deficiency payments (LDP) and payments that combine market loan assistance (MLA) and disaster payments are shown to reduce leisure. The study also finds that AMTA payments exhibit a much higher degree of income transfer efficiency than the LDP and MLA payments.
Tipo: Journal Article Palavras-chave: Agricultural Resource Management Survey; Decoupled payments; Government programs; Income transfer efficiency; Time allocation; Agricultural and Food Policy; Farm Management; D13; J22; Q12; Q22.
Ano: 2007 URL: http://purl.umn.edu/6296
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NONPECUNIARY BENEFITS TO FARMING AND DECOUPLED PAYMENTS AgEcon
Key, Nigel D.; Roberts, Michael J..
The first part of this paper presents a simple labor supply and production model wherein farmers with diminishing marginal utility of income derive nonpecuniary benefits from farming. We use the model to show how lump-sum or “decoupled” government payments could have positive and substantial effects on the supply of agricultural products. The result is simple and intuitive: payments allow those who enjoy farming to continue farming while maintaining a reasonably high living standard. Without payments, a lower living standard leads to higher marginal utility of income, making higher off-farm wages more desirable than lower on-farm wages plus non-pecuniary benefits from farming. Farmers respond to a reduction in payments by shifting their labor off-farm...
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Government payments; Nonpecuniary benefits; Labor supply; Trade; Agricultural and Food Policy.
Ano: 2007 URL: http://purl.umn.edu/9831
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On- and Off-Farm Labour Supply of Dutch Dairy Farmers: Estimation and Policy Simulations AgEcon
Ooms, Daan L.; Hall, Alastair R..
This research focuses on the effect of decoupled payments on labour supply of Dutch dairy farmers. Data availability leads to the fact that we can not estimate structural labour supply equations. We show how to derive reduced form equations suitable for policy simulations. We use the panel data sample selection estimation approach Wooldridge (1995) to estimate the off-farm labour supply equation. This method is based on Mundlak's (1978) linear panel data estimation approach, which we use to estimate the on-farm labour supply equations. Even though, simulations show a significant negative effect of decoupled payments on labour supply, the economic significance of this effect is very limited.
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Labour supply; Panel data; Sample selection; Policy simulation; Labor and Human Capital; Livestock Production/Industries; C23; C24; C51; C53; D13; J22; Q12; Q18.
Ano: 2005 URL: http://purl.umn.edu/24506
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Production Effects of the European Union’s Single Farm Payment AgEcon
Rude, James.
Since 1992, reform of the EU’s Common Agricultural Policy has involved several rounds that have gradually changed the method of support from market based intervention purchases to direct producer payments. The change in the method support provides less production incentives and is less trade distorting. The Single Farm Payment (SFP) is the latest policy instrument which is the most decoupled from production decisions. This study examines the SFP in terms of its production effects, its compliance with the Annex 2 of the WTO Agreement on Agriculture, and the implications for Canadian agricultural policy reform.
Tipo: Working or Discussion Paper Palavras-chave: Common Agriculture Policy; Decoupled payments; WTO green box; Agricultural and Food Policy; Q17; Q18.
Ano: 2007 URL: http://purl.umn.edu/7335
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Production Incentives from Static Decoupling: Entry, Exit and Use Exclusion Restrictions AgEcon
Just, David R.; Kropp, Jaclyn D..
The use of agricultural decoupled support has increased as World Trade Organization (WTO) member nations implement less trade distortive policies. However, the true production effects of these policies are still unclear. We show how the exclusion restrictions of U.S. direct payments, namely, the fruit and vegetable restriction and the requirement of keeping land in good agricultural use, cause the decoupled payment to become fully coupled over time as relative profits adjust. Theoretically, decoupled payments can be more trade distorting than an equivalent (same level of taxpayer expenditure) fully coupled subsidy.
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Infra-marginal support; Cross-subsidization; Agricultural and Food Policy; International Relations/Trade; Land Economics/Use; Q15; Q17; Q18.
Ano: 2009 URL: http://purl.umn.edu/49158
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Reform and Adjustment in the European Union: The 2003 Reform of the Common Agricultural Policy and Enlargement AgEcon
Bascou, Pierre; Londero, Pierluigi; Munch, Wolfgang.
This paper aims at presenting the main findings of an impact analysis of the reform of the Common Agricultural Policy on the agricultural markets and income of the current and the enlarged European Union over the 2004-2010 period, with specific investigation of the impact of the single farm payment. This policy changes towards significantly less-trade distorting instruments should reduce the risk of structural surpluses. The market projections indicate that adjustment of production would take part in key areas of agricultural production in Europe (cereal, beef and dairy production) while keeping agricultural income little affected.
Tipo: Conference Paper or Presentation Palavras-chave: Common Agricultural Policy; Enlargement; Decoupled payments; Reform; Agricultural and Food Policy.
Ano: 2004 URL: http://purl.umn.edu/15769
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Shaping Agribusiness and its Impact on the Competitive Environment of Agricultural Enterprises AgEcon
Becvarova, Vera.
The paper deals with the key issues of contemporary food system development and their economic content related to the position of agricultural enterprises. It explains, that the problem faced by the whole Europe and thus also by the Czech Republic, i.e. how to compete successfully on an increasingly globalised food market, fully concerns the shaping of a new agriculture structure and all its sectors, which are more-or-less related to the food and non food sector based upon agricultural raw materials production. By generalising the typical features in the running integration processes within this economy segment, essential tendencies of changes in the present-day business environment which affect both the supply and demand sides of market formation,...
Tipo: Conference Paper or Presentation Palavras-chave: Agribusiness; Agricultural enterprise; Competitiveness; Decoupled payments; Structural change; Agribusiness.
Ano: 2007 URL: http://purl.umn.edu/7824
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The Acreage and Borrowing Effects of Direct Payments Under Uncertainty: A Simulation Approach AgEcon
Girante, Maria Joana; Goodwin, Barry K..
We use simulation methods in an expected utility maximization framework to analyze a farmer’s optimal resource allocation in the presence of government payments, decoupled and not. This framework is extended to incorporate the optimal choice of investment levels in the presence of credit constraints. Further extensions include a wealth-dependent interest rate and decreasing marginal yields. We find decoupled payments affect the optimal choices of the credit-constrained farmer through a collateral-enhancement effect, so they do distort production. The 2005 proposal by Senators Grassley, Dorgan, Hagel, and Johnson to tighten limits on commodity payments is not found to affect payments of the typical Kansas farmer.
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Credit constraints; Agricultural and Food Policy; International Relations/Trade; Q17; Q18.
Ano: 2009 URL: http://purl.umn.edu/49349
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The Impact of Decoupled Payments on the Cost of Operating Capital AgEcon
Kropp, Jaclyn D.; Whitaker, James B..
We estimate the impact of direct payments under the 2002 Farm Act on the credit terms of farm operators, specifically the interest rate on short-term operating loans. In the analysis, we control for farm financial characteristic, farm operator characteristics, and other factors. Using data from the Agricultural Resource Management Survey (ARMS) for the year 2007, we show that as the proportion of base acres to total operated acres increases, interest rates decline by a small but statistically significant amount. This implies that direct payments lead to lower operating costs through better credit terms. Lower operating costs may in turn allow some farmers to produce on land that would otherwise be unprofitable to operate.
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Credit rationing; Agricultural and Food Policy; Agricultural Finance; International Relations/Trade; Q15; Q17; Q18.
Ano: 2009 URL: http://purl.umn.edu/49311
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The impact of pillar I support on farm choices: conceptual and methodological challenges AgEcon
Moro, Daniele; Sckokai, Paolo.
In the near future the CAP will continue to be structured around two pillars. In the first pillar the main instrument for producers’ support is the decoupled Single Farm Payment. In this paper we review the methodological framework for analysing decoupled payments in models of agricultural production. Market and technological uncertainty, credit constraints, farm household choices involving extra-agricultural decisions, policy uncertainty and long-run impact of decoupling on investment and land values are the relevant issues that should be pursued by methodological and empirical analysis. Future research should refine the analysis of decoupled payments, mainly trying to provide results that can be useful for policy simulation, to bridge the gap between...
Tipo: Conference Paper or Presentation Palavras-chave: Decoupled payments; Agricultural production models; Common Agricultural Policy; Agricultural and Food Policy; Q12; Q18.
Ano: 2011 URL: http://purl.umn.edu/99836
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Wealth, Debt, Government Payments, and Yield Performance AgEcon
Girante, Maria Joana; Goodwin, Barry K.; Featherstone, Allen M..
We use a large sample of Kansas Farm Management Association farms for eight different crop/practice combinations (dryland and irrigated corn, sorghum, soybeans, and wheat) for 1994 through 2006 to evaluate the determinants of relative yield performance and explore the ability of financial variables to account for some of the remaining unexplained variation. Our hypothesis is that more financially sound farms should be able to implement better production techniques, thus have better yields. We further test whether decoupled payments can be used to enhance yield performance. Our hypothesis is that payments may be used to boost investment in inputs or equipment that can lead to better yields. Our results suggest this could be the case.
Tipo: Conference Paper or Presentation Palavras-chave: Yield performance; Decoupled payments; Credit constraints; Agricultural and Food Policy; Farm Management; International Relations/Trade; Q17; Q18.
Ano: 2009 URL: http://purl.umn.edu/49353
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