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USDA Report: Potential Farm-Level Effects of Eliminating Direct Payments
Story Date: 11/21/2012
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Source: USDA ERS, November 2012
Since 2003, direct payments have accounted for a signifi cant portion of farm program
payments. If direct payments were eliminated, many agricultural producers would be
affected, both through the loss of income and potential declines in land values and rental
rates. This report considers the potential contribution of direct payments to farm revenues
and land values across farm commodities and regions and estimates the magnitude of
the fi nancial impact on participating farms should direct payments be eliminated. Direct
payments are highest relative to crop revenues in parts of the Northern Plains, Southern
Plains, Mountain, Delta, and Southeast regions, and the estimated effect of direct
payments on cropland values also is relatively high in many of these regions. Overall,
our analysis suggests that an abrupt end to the direct payment program could reduce
the number of farms with a favorable fi nancial status (profi table farms having relatively
low debt burdens) by about 11,000 nationally, or about 2 percent of farms that received
direct payments in 2009. The estimated effect varies regionally and is more pronounced
in the Delta and Southeast regions, where direct payments per farm tend to be higher, on
average, than elsewhere.
For the full report,click here.
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