Posted Content•
Policy Reform in American Agriculture
01 Jan 1999-
TL;DR: In this paper, the authors examine the history of farm subsidies and the contemporary relevance of traditional farm programs to today's agricultural industries and assess the often staunch political resistance to much-needed policy reforms.
Abstract: Despite substantial transformations in American agriculture, farm program spending remains a closely guarded prerogative of United States agricultural policy. Policy Reform in American Agriculture examines both the history of farm subsidies and the contemporary relevance of traditional farm programs to today's agricultural industries. This work analyzes the mixed performance of past agricultural support programs, reviews the current debate concerning farm policies, and critically assesses the often staunch political resistance to much-needed policy reforms. Casting a keen eye toward the most recent developments on both national and international fronts, the authors consider the ramifications of the 1996 Federal Agriculture Improvement and Reform (FAIR) Act as well as multilateral efforts to gain agricultural reform during the Uruguay Round of GATT. Their prognosis hinges upon both the continued growth and competitiveness of the world market and, perhaps more importantly, the ongoing commitment of congressional reform advocates.
Citations
More filters
TL;DR: This paper found that farmers who rent the land they cultivate capture 75 percent of the subsidy, leaving just 25 percent for landowners, which is contrary to the prediction from neoclassical models.
Abstract: Who benefits from agricultural subsidies is an open question. Economic theory predicts that the entire subsidy incidence should be on the farmland owners. Using a complementary set of policy quasi experiments, 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 because of less than perfect competition in the farmland rental market; the share captured by landowners increases with local measures of competitiveness in the farmland rental market.
245 citations
01 Jan 2010
TL;DR: The authors reviewed innovative research that has emerged in recent years, both in the general economics literature and as applied to agricultural and food policies, focusing on capturing interactions between explanatory variables, more refined measurement of (political) institutions and reforms, the effects of international agreements, broader representation of agents, more explicit modeling of crises, discontinuous effects, and the interaction of multiple policies.
Abstract: This article reviews innovative research that has emerged in recent years, both in the general economics literature and as applied to agricultural and food policies. There have been important innovations and new insights in these fields, particularly regarding the micro-foundations of political decision-making, the impact of political institutions and ideology, and the role of the media. Data have also improved substantially. However, there are still important gaps in our understanding. Further research should focus on capturing interactions between explanatory variables, more refined measurement of (political) institutions and reforms, the effects of international agreements, broader representation of agents, more explicit modeling of crises, discontinuous effects, and the interaction of mul- tiple policies.
79 citations
TL;DR: In the United States' Northeastern region, there is an increasing interest in the public benefits from agriculture as mentioned in this paper, which are frequently referred to as multifunctional attributes, and the policy challenge is to find an effective way to reflect these public demands so that multi-functional agriculture can be profitable.
Abstract: In the United States' Northeastern region, there is an increasing interest in the public benefits from agriculture. These benefits are frequently referred to as multifunctional attributes. The policy challenge is to find an effective way to reflect these public demands so that multifunctional agriculture can be profitable. There is a significant research agenda that accompanies this challenge. Research topics include assessing and understanding consumer demand for multifuntional attributes, estimating the long-run returns to those production systems which supply these attributes, and designing and evaluating institutional arrangements to supply them. Key Words: farmland protection, land use policy, multifunctional agriculture As the Northeastern region of the United States becomes increasingly urban, there is an attendant interest in the beneficial attributes associated with agricultural landscapes. Agricultural enterprises can offer public benefits such as the provision of improved water quality, wildlife habitat, landscape amenities, flood control, nutrient recycling, and carbon sinks. Sometimes the definition of agro-benefits is stretched beyond public goods to include the production of wind energy, water harvesting, or food security (Aldington, 1998; Dobbs and Pretty, 2001 ; Harwood, 2001 ; Josling, 2002). Agriculture can also provide opportunities for hunting, agro-tourism, and agro-entertainment, as well as being associated with regional identity, heritage values, and rural vitality and ambience. The European term for these relationships is "multifunctional agriculture." While not precisely defined, the term is used to contrast these-mostly nonmarket-benefits from agriculture with the market benefits from the provision of raw materials for the food and fiber industry (Josling, 2002). The European multifunctional paradigm challenges the market-oriented paradigm with respect to the role of agriculture in the modern economy (Josling, 2002). Indeed, multifunctionality is sometimes viewed as a foundation for the "European model of agriculture" (Potter and Burney, 2002). This European concept of agriculture-which, of course, is not held by everyone in Europe-draws its lessons from a more holistic view of systems and sustainability (Josling, 2002). Supporters of multifunctional agriculture argue that such an agriculture "is rich in diversity and traditions, intent on preserving the countryside, a living rural world that offers rural employment" (Barthelemy, 2001). In Europe, agricultural policy frequently garners more public support when it is tied to broad social objectives rather than only production objectives. Furthermore, because the market commodities will not reward farmers for the production of most multifunctional attributes, European supporters of multifunctional agriculture advocate a public role for incentives. This support translates into agriculture policies which provide assistance to farmers for the provision of multifunctional attributes (Potter, 1998). An example is public compensation of farmers for the loss of market revenues because the farmers provided more wildlife habitat (Dobbs and Pretty, 2001; Libby, 2002; Potter, 1998). There are also some markets which do reflect these public preferences. For example, some Europeans have demonstrated that they are willing to pay for food attributes such as "sustainably grown" (Moon et al., 2002), or such as having a food with a regional identity (e.g., regional cheese). The Northeastern region of the United States has shown an increased interest in multifunctional attributes from agriculture. This interest is predictable. As incomes rise, multifunctional attributes are increasingly valued; i.e., the income elasticity for multifunctional attributes is higher than that of traditional food and fiber. Furthermore, the more populated regions of the country are most concerned with protecting mutifunctional rural amenity attributes (Hellerstein et al. …
72 citations
TL;DR: This article reviewed innovative research that has emerged in recent years, both in the general economics literature and as applied to agricultural and food policies, focusing on capturing interactions between explanatory variables, more refined measurement of political institutions and reforms, the effects of international agreements, broader representation of agents, more explicit modeling of crises, discontinuous effects, and the interaction of multiple policies.
Abstract: This article reviews innovative research that has emerged in recent years, both in the general economics literature and as applied to agricultural and food policies. There have been important innovations and new insights in these fields, particularly regarding the micro-foundations of political decision-making, the impact of political institutions and ideology, and the role of the media. Data have also improved substantially. However, there are still important gaps in our understanding. Further research should focus on capturing interactions between explanatory variables, more refined measurement of (political) institutions and reforms, the effects of international agreements, broader representation of agents, more explicit modeling of crises, discontinuous effects, and the interaction of multiple policies.
71 citations
TL;DR: In this paper, a new field-level data set was used to precisely link subsidies to land parcels, and they showed that the bias is considerable: where farm-level estimates suggest an incidence of 20 to 79 cents of the marginal subsidy dollar, field level estimates from the same farms indicate that landlords capture just 10 to 25 cents, while the size of the farm and the duration of the rental arrangement have substantial effects.
Abstract: If agricultural subsidies are largely capitalized into farmland values then expanding support for agriculture may not benefit farmers who rent the land they farm. Suddenly reducing subsidies may be problematic to the extent that land values already embody expectations about future subsidies. Existing evidence on the incidence of subsidies on land values is mixed. Identification is obscured by unobserved or imprecisely measured factors that tend to be correlated with subsidies, especially land quality and time-varying factors like commodity prices and adverse weather events. A problem that has received less attention is the fact that subsides and land quality on rented land may differ from owned land. Since most farms possess both rented and owned acreage, farm-level measures of subsidies, land values and rental rates may bias estimated incidence. Using a new, field-level data set that, for the first time, precisely links subsidies to land parcels, we show that this bias is considerable: Where farm-level estimates suggest an incidence of 20 to 79 cents of the marginal subsidy dollar, field-level estimates from the same farms indicate that landlords capture just 10â25 cents. The size of the farm and the duration of the rental arrangement have substantial effects. Incidence falls by 5â15 cents per acre when doubling total operated acres, and the incidence falls by 0.1â1.2 cents with each additional year of the rental arrangement. Low incidence of subsides on rents combined with the farm-size and duration effects suggest that farmers renting land have monopsony power.
49 citations