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The Effects of Policy Expectations on Crop Supply, with an Application to Base Updating

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  • Nathan P. Hendricks
  • Daniel A. Sumner

Abstract

We develop a dynamic model to assess the effects of policy expectations on crop supply and illustrate the approach with estimates of the effects of base updating in U.S. crop programs. For corn and soybeans in the Corn Belt, the effect of base updating is relatively small because relevant crop alternatives are subject to similar policies and the alternatives are substitutes in production. Increasing acreage of one program crop to capture future payments from base updating reduces future payments from the alternative crop. We also use our model to assess the effect of base updating on acreage response to prices.

Suggested Citation

  • Nathan P. Hendricks & Daniel A. Sumner, 2014. "The Effects of Policy Expectations on Crop Supply, with an Application to Base Updating," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(3), pages 903-923.
    • Handle: RePEc:oup:ajagec:v:96:y:2014:i:3:p:903-923.
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    File URL: http://hdl.handle.net/10.1093/ajae/aat090
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    Citations

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    Cited by:

    1. Yu, Jisang & Smith, Aaron & Sumner, Daniel A., 2016. "The Effects of the Premium Subsidies in the U.S. Federal Crop Insurance Program on Crop Acreage," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236022, Agricultural and Applied Economics Association.
    2. Nathan P. Hendricks, 2022. "Would farmers benefit from removing more land from production in the next farm bill?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1139-1157, September.
    3. Zulauf, Carl & Langemeier, Michael & Schnitkey, Gary, 2022. "U.S. Crop Profitability and Farm Safety Net Payments Since 1975," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2022.
    4. Demirdöğen, Alper & Olhan, Emine & Chavas, Jean-Paul, 2016. "Food vs. fiber: An analysis of agricultural support policy in Turkey," Food Policy, Elsevier, vol. 61(C), pages 1-8.
    5. Zulauf, Carl & Orden, David, 2014. "The US Agricultural Act of 2014: Overview and analysis:," IFPRI discussion papers 1393, International Food Policy Research Institute (IFPRI).
    6. Glauber, Joseph W. & Effland, Anne, 2016. "United States agricultural policy: Its evolution and impact:," IFPRI discussion papers 1543, International Food Policy Research Institute (IFPRI).
    7. Thompson, Wyatt & Gerlt, Scott & Dewbre, Joe H. & Effland, Anne B., 2020. "Rescuing the Decoupling Literature from Incomparable Chaos," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304366, Agricultural and Applied Economics Association.
    8. David Orden & Carl Zulauf, 2015. "Political Economy of the 2014 Farm Bill," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1298-1311.

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