Are Farm Programs Counter-Productive?: Are Farm Programs Counter-Productive?
One justification for farm programs is that U.S. farmers need support because of their exposure to a great amount of risk. But won’t a reduction in risk also reduce expected returns? Perhaps, but farm programs also increased expected or average returns. Structure of Program Payments for Soybeans: Structure of Program Payments for Soybeans Target Price Fixed Payment Loan Rate Counter-Cyclical Payment Loan Deficiency Payment Prod Req. $5.80 $0.44 $5.36 $5.00 Regardless Of Market Only If… Effects of Government Programs: Effects of Government Programs With no government programs, probability of negative net revenue is about 5% (1 in 20 years). With government programs probability of net revenue less than $60/acre is less than 1%; probability of net revenue less than $70/acre is less than 5%. Average net revenue increases from $114/ac to $145/ac. Effects of Government Programs on Iowa Cash Renters: Effects of Government Programs on Iowa Cash Renters Cash rents will increase due to the incre
