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Potential Distortionary Effects of Relocating Generic Base Acres

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  • Kropp, Jaclyn

Abstract

The Agricultural Act of 2014 brings significant changes to U.S. farm policy, eliminating Countercyclical (CC), Fixed Direct, and Average Crop Revenue Election (ACRE) programs, and introducing new Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs, which provide payments calculated using historic (base) acreage. These payments support field crops, excluding cotton. As a result, producers with base acres associated with cotton production will be allowed to relocate these “generic base” acres annually and receive support for whatever supported crop they plant on these generic base acres. Thus, profit maximizing producers with generic base may stop planting cotton and instead plant crops supported by PLC and ARC programs. Using USDA data, this paper investigates the potential distortions associated with the reallocation of generic base acres as farmers “plant for the program.”

Suggested Citation

  • Kropp, Jaclyn, 2015. "Potential Distortionary Effects of Relocating Generic Base Acres," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196855, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea15:196855
    DOI: 10.22004/ag.econ.196855
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    References listed on IDEAS

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    1. Carlos Arnade & David Kelch, 2007. "Estimation of Area Elasticities from a Standard Profit Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 727-737.
    2. Duffy, Patricia A. & Richardson, James W. & Wohlgenant, Michael K., 1987. "Regional Cotton Acreage Response," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 19(1), pages 1-11, July.
    3. B. J. Morzuch & R. D. Weaver & P. G. Helmberger, 1980. "Wheat Acreage Supply Response under Changing Farm Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(1), pages 29-37.
    4. Arathi Bhaskar & John C. Beghin, 2010. "Decoupled Farm Payments and the Role of Base Acreage and Yield Updating Under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 849-858.
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    Keywords

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