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Agricultural Subsidies

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Barrett E. Kirwan – 1st expert on this subject based on the ideXlab platform

  • u s farm dynamics and the distribution of u s Agricultural Subsidies
    Applied Economics Letters, 2017
    Co-Authors: Barrett E. Kirwan

    Abstract:

    ABSTRACTThe persistent instability of the Agricultural sector is the fundamental premise of most Agricultural policy. Yet no research has ever quantified the aggregate dynamics of individual farms in the US. This article is the first to combine the US Census of Agriculture with the Agricultural Resource Management Survey to observe the dynamics of nearly 1.5 million farms. The data reveal substantial variation in farm size expansion and contraction. Most of this variation is unobservable in the sector totals reported by the US Department of Agriculture each year. The distribution of Agricultural Subsidies suggests that Subsidies become more important as farms get smaller and may play a role in slowing farm size contraction.

  • who really benefits from Agricultural Subsidies evidence from field level data
    American Journal of Agricultural Economics, 2016
    Co-Authors: Barrett E. Kirwan, Michael J Roberts

    Abstract:

    If Agricultural Subsidies are largely capitalized into farmland values through their effect on rental rates, then expanding support for agriculture may not benefit farmers who rent the land they farm. Existing evidence on the incidence of Subsidies on cash rental rates is mixed. Identification is obscured by unobserved or imprecisely measured factors that tend to be correlated with Subsidies, especially land quality and time-varying factors like commodity prices and adverse weather events. A problem that has received less attention is the fact that Subsidies and land quality on rented land may differ from owned land. Since most farms possess both rented and owned acreage, farm-level measures of Subsidies, land values, and rental rates may bias estimated incidence. Using a new, field-level data set that, for the first time, precisely links Subsidies to land parcels, we show that this bias is considerable: where farm-level estimates suggest an incidence of 42–49 cents of the marginal subsidy dollar, field-level estimates from the same farms indicate that landlords capture just 20–28 cents. The size of the farm and the duration of the rental arrangement have substantial effects. Incidence falls by 5–15 cents when doubling total operated acres, and the incidence falls by 0.1–0.8 cents with each additional year of the rental arrangement. Low incidence of Subsidies on rents combined with the farm-size and duration effects suggest that farmers renting land have monopsony power.

  • who really benefits from Agricultural Subsidies evidence from field level data
    2010 Annual Meeting July 25-27 2010 Denver Colorado, 2010
    Co-Authors: Barrett E. Kirwan, Michael J Roberts

    Abstract:

    If Agricultural Subsidies are largely capitalized into farmland values then expanding support for agriculture may not benefit farmers who rent the land they farm. Suddenly reducing Subsidies may be problematic to the extent that land values already embody expectations about future Subsidies. Existing evidence on the incidence of Subsidies on land values is mixed. Identification is obscured by unobserved or imprecisely measured factors that tend to be correlated with Subsidies, especially land quality and time-varying factors like commodity prices and adverse weather events. A problem that has received less attention is the fact that subsides and land quality on rented land may differ from owned land. Since most farms possess both rented and owned acreage, farm-level measures of Subsidies, land values and rental rates may bias estimated incidence. Using a new, field-level data set that, for the first time, precisely links Subsidies to land parcels, we show that this bias is considerable: Where farm-level estimates suggest an incidence of 20 to 79 cents of the marginal subsidy dollar, field-level estimates from the same farms indicate that landlords capture just 10–25 cents. The size of the farm and the duration of the rental arrangement have substantial effects. Incidence falls by 5–15 cents per acre when doubling total operated acres, and the incidence falls by 0.1–1.2 cents with each additional year of the rental arrangement. Low incidence of subsides on rents combined with the farm-size and duration effects suggest that farmers renting land have monopsony power.

Eleonora De Falcis – 2nd expert on this subject based on the ideXlab platform

  • What Drives China’s New Agricultural Subsidies?
    World Development, 2017
    Co-Authors: Rigoberto A. Lopez, Xi He, Eleonora De Falcis

    Abstract:

    China’s Agricultural policy has undergone a fundamental transformation in the four decades since the introduction of market reforms in 1978 and now involves a wide array of policy instruments that range from output and input Subsidies to public infrastructure expenditures. This article analyzes the political-economic determinants of China’s Agricultural subsidy changes using producer subsidy equivalents (PSEs) drawn from annual data from 1984 to 2015 on 16 Agricultural commodity sectors that include multiple policy instruments. Empirical results indicate that national factors, such as high rates of economic growth and a lower share of agriculture in the economy, have been the primary drivers of increases in PSEs, and that larger, more geographically concentrated Agricultural sectors are more likely to be subsidized at a higher PSE rate. Finally, China’s joining the World Trade Organization in December 2001 led to significant increases in PSEs that were not already explained by internal national or commodity-specific factors. In essence, China’s Agricultural subsidy programs and levels increasingly resemble those of developed countries, primarily as a result of economic transformation and the ability to structure Agricultural policies within the WTO rules. Moreover, this article predicts that Agricultural Subsidies will trend slightly upward in the next decade and that the strongest opportunities to export to China will be in animal products or grains that are utilized for feed or processed foods, where the levels of Subsidies are predicted to increase but remain lower than for traditional food crops.

  • what drives china s new Agricultural Subsidies
    World Development, 2017
    Co-Authors: Rigoberto A. Lopez, Xi He, Eleonora De Falcis

    Abstract:

    China’s Agricultural policy has undergone a fundamental transformation in the four decades since the introduction of market reforms in 1978 and now involves a wide array of policy instruments that range from output and input Subsidies to public infrastructure expenditures. This article analyzes the political-economic determinants of China’s Agricultural subsidy changes using producer subsidy equivalents (PSEs) drawn from annual data from 1984 to 2015 on 16 Agricultural commodity sectors that include multiple policy instruments. Empirical results indicate that national factors, such as high rates of economic growth and a lower share of agriculture in the economy, have been the primary drivers of increases in PSEs, and that larger, more geographically concentrated Agricultural sectors are more likely to be subsidized at a higher PSE rate. Finally, China’s joining the World Trade Organization in December 2001 led to significant increases in PSEs that were not already explained by internal national or commodity-specific factors. In essence, China’s Agricultural subsidy programs and levels increasingly resemble those of developed countries, primarily as a result of economic transformation and the ability to structure Agricultural policies within the WTO rules. Moreover, this article predicts that Agricultural Subsidies will trend slightly upward in the next decade and that the strongest opportunities to export to China will be in animal products or grains that are utilized for feed or processed foods, where the levels of Subsidies are predicted to increase but remain lower than for traditional food crops.

Pavel Ciaian – 3rd expert on this subject based on the ideXlab platform

  • do Agricultural Subsidies crowd out or stimulate rural credit market institutions the case of eu common Agricultural policy
    European Integration online Papers (EIoP), 2012
    Co-Authors: Pavel Ciaian, Jan Pokrivcak, Katarina Szegenyova

    Abstract:

    In this paper we estimate the impact of Agricultural Subsidies granted under the European Union’s Common Agricultural Policy (CAP) on bank loans extended to farms. According to our theoretical analysis, Subsidies may either stimulate or crowd out bank loans depending on the timing of Subsidies, severity of credit constraint, type of Subsidies and bank loans, and the relative cost of internal and external financing. In empirical analysis we use the Farm Accountancy Data Network (FADN) farm level panel data for the period 1995-2007. We employ the fixed effects and generalised method of moment (GMM) models. The estimated results suggest that (i) big farms tend to use Subsidies to increase long-term loans, whereas small farms tend to use Subsidies to obtain short-term loans; (ii) Subsidies tend to crowd out short-term loans for big farms and long-term loans for small farms; (iii) when controlling for the endogeneity, the crowding out effect becomes smaller, but the positive causal effect of Subsidies on bank loans remains significant.

  • do Agricultural Subsidies crowd out or stimulate rural credit institutions the case of cap payments
    2011 International Congress August 30-September 2 2011 Zurich Switzerland, 2011
    Co-Authors: Pavel Ciaian, Jan Pokrivcak

    Abstract:

    In this paper we estimate the impact of Subsidies from the EU’s common Agricultural policy on farm bank loans. According to the theoretical results, if Subsidies are paid at the beginning of the growing season they may reduce bank loans, whereas if they are paid at the end of the season they increase bank loans, but these results are conditional on whether farms are credit constrained and on the relative cost of internal and external financing. In the empirical analysis, we use farm-level panel data from the Farm Accountancy Data Network to test the theoretical predictions for the period 1995–2007. We employ fixed-effects and generalised method of moment models to estimate the impact of Subsidies on farm loans. The results suggest that Subsidies influence farm loans and the effects tend to be non-linear and indirect. The results also indicate that both coupled and decoupled Subsidies stimulate long-term loans, but the long-term loans of large farms increase more than those of small farms, owing to decoupled Subsidies. Furthermore, the results imply that short-term loans are affected only by decoupled Subsidies, and they are altered by decoupled Subsidies more for small farms than for large farms; however, when controlling for endogeneity, only the decoupled payments affect loans and the relationship is non-linear.

  • credit market imperfections and the distribution of policy rents the common Agricultural policy in the new eu member states
    107th Seminar January 30-February 1 2008 Sevilla Spain, 2007
    Co-Authors: Pavel Ciaian, Johan F M Swinnen

    Abstract:

    This article analyses how credit market imperfections affect the impacts of Subsidies by analyzing the effects of Agricultural Subsidies in the new Eastern Member States of the European Union with a partial equilibrium model which integrates credit and land market imperfections. We show that credit constraints have important implications for the distribution of policy rents. Credit market imperfections may induce very different effects of direct payments and lump-sum transfers.