Proceedings

NPR – THE ROLE OF U. S. SAFETY NET PROGRAMS IN INCENTIVIZING FARM GROWTH: A SIMULATION APPROACH

Richardson, J. W., Outlaw, J. L.


Abstract:
Safety net programs affect farm income and farmers ability to manage risk.  Some economists argue that safety net programs benefit large farmers more and accelerate farm consolidation.  The purpose of the paper is to test the hypothesis that the U.S. 2014 Farm Bill safety net programs are structurally biased to benefit large crop farms in the United States. A Monte Carlo simulation of 16 pairs of moderate and large farms in principal production regions of the U.S. are analyzed to estimate the $/hectare benefits of farm programs (ARC and PLC) and federal crop insurance.  Results of the analysis suggest that for commercial size crop farms, safety net programs provide greater $/hectare benefits to moderate size farms compared to large farms.  Additionally, the analysis showed that crop insurance programs are essentially neutral, providing about equal benefits to moderate and large scale crop farms.
Keywords: farm programs, insurance, farm structure, simulation, and safety net

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Author(s): Outlaw, J.L., Richardson J.W.

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Organizations(s): Texas A&M University