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Do Decoupled Payments Stimulate Production? Estimating the Effect on Program Crop Acreage Using Matching

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  • Key, Nigel D.
  • Roberts, Robert J.

Abstract

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 consistent with other recent empirical estimates that suggest small but statistically significant effects of decoupled payments on production.

Suggested Citation

  • Key, Nigel D. & Roberts, Robert J., 2008. "Do Decoupled Payments Stimulate Production? Estimating the Effect on Program Crop Acreage Using Matching," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6072, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6072
    DOI: 10.22004/ag.econ.6072
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    References listed on IDEAS

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    1. Michael J. Roberts & Nigel Key & Erik O'Donoghue, 2006. "Estimating the Extent of Moral Hazard in Crop Insurance Using Administrative Data," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(3), pages 381-390.
    2. Barry K. Goodwin & Ashok K. Mishra, 2006. "Are “Decoupled” Farm Program Payments Really Decoupled? An Empirical Evaluation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 73-89.
    3. Chau, Nancy H. & de Gorter, Harry, 2000. "Disentangling The Production And Export Consequences Of Direct Farm Income Payments," 2000 Annual meeting, July 30-August 2, Tampa, FL 21854, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. David A. Hennessy, 1998. "The Production Effects of Agricultural Income Support Policies under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 46-57.
    5. Roe, Terry & Somwaru, Agapi & Diao, Xinshen, 2002. "Do direct payments have intertemporal effects on U.S. agriculture?," TMD discussion papers 104, International Food Policy Research Institute (IFPRI).
    6. Nigel Key & Ruben N. Lubowski & Michael J. Roberts, 2005. "Farm-Level Production Effects from Participation in Government Commodity Programs: Did the 1996 Federal Agricultural Improvement and Reform Act Make a Difference?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1211-1219.
    7. Key, Nigel D. & Roberts, Michael J., 2007. "Do Government Payments Influence Farm Size and Survival?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 32(2), pages 1-19, August.
    8. Barry K. Goodwin & Ashok K. Mishra, 2005. "Another Look at Decoupling: Additional Evidence on the Production Effects of Direct Payments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1200-1210.
    9. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
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    Cited by:

    1. Jan Fałkowski & Pavel Ciaian & d'Artis Kancs, 2009. "Access to Credit, Factor Allocation and Farm Productivity: Evidence From the CEE Transition Economies," Working Papers 2009-12, Faculty of Economic Sciences, University of Warsaw.
    2. Pavel Ciaian & Jan Fałkowski & D’Artis Kancs, 2012. "Productivity and credit constraints: A firm-level propensity score evidence for agricultural farms in central and east European countries," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 62(4), pages 459-487, December.
    3. Olper, Alessandro & Falkowski, Jan & Swinnen, Johan F.M., 2009. "Democracy and Agricultural Protection: Parametric and Semi-parametric Matching Estimates," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49313, Agricultural and Applied Economics Association.
    4. Fan, Pengfei & Mishra, Ashok K., 2022. "The Impact of Agricultural Support and Protection Subsidies on Grain Production in China," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322474, Agricultural and Applied Economics Association.
    5. Ciaian, Pavel & Fa?kowski, Jan & d’Artis, Kanc & Pokrivcak, Jan, 2011. "Productivity and Credit Constraints: Firm-Level Evidence from Propensity Score Matching," Factor Markets Working Papers 99, Centre for European Policy Studies.
    6. 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.
    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.

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    Keywords

    Agricultural and Food Policy; Crop Production/Industries; Production Economics;
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