Corn Program Participation and Farm Program Opinions
Sharon Baxter, Carl Zulauf, Gary Schnitkey and Lynn Forster
Review of Agricultural Economics
Vol. 18, No. 1 (Jan., 1996), pp. 43-51
Stable URL: http:/stable/1349665
Page Count: 9
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A national debate is occurring on whether to reduce and/or eliminate the programs that provide income deficiency payments to farmers. Participation in these programs is voluntary. Therefore, the impacts of downsizing the deficiency payment programs will be greatest for those farmers who currently participate. Past studies of farm program participation have included neither the conceptually-important variable, profitability of participation, nor the potential interrelationship between participation and opinion toward farm programs. This study addresses both omissions. Data from a 1991 survey of Ohio farmers are used to jointly analyze their: (1) decisions to participate in the corn program and (2) opinions toward farm programs. Empirical results imply that a recursive system exists in which a farmer first determines whether to participate, then forms an opinion on farm programs. The probability of participation is found to increase as owned corn base acres increase, percent of total corn acres rented increases, share of total farm sales from milk decreases, break-even price between nonparticipation and participation increases, and the debt-to-asset ratio increases. Thus, reducing or eliminating the corn program will have a greater impact on farms that are larger, do not sell milk, and are more leveraged. The finding on break-even price implies that farmers who will lose the most are those with the highest variable costs of production and the highest farm program yield relative to expected yield. The finding on the debt-to-asset ratio supports arguments that reducing farm programs will cause farms to adjust how risk is handled. All farm structure variables that significantly affect participation also significantly affect farm program opinion. In contrast, characteristics of the farmers, as represented by age and education, do not influence participation, but do influence farm program opinion. Economic self-interest, as measured by break-even price, is marginally insignificant with respect to opinion.
Review of Agricultural Economics © 1996 Agricultural & Applied Economics Association