What is in this article?:
- USDA looks at impact of ending direct payments
- Effect on land values
- USDA has found that, “an abrupt end to the direct payment program could reduce the number of farms with a favorable financial status (profitable farms having relatively low debt burdens) by about 11,000 nationally, or about 2 percent of farms that received direct payments in 2009.
Unless drastic changes are made to the Senate and House Agriculture Committee farm bills, direct payments will be a thing of the past.
In a new study, the USDA’s Economic Research Service has found that, “an abrupt end to the direct payment program could reduce the number of farms with a favorable financial status (profitable 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.”
The actual analysis, says Jennifer Ifft, one of the study’s authors, “didn’t take that long. However, the whole process took over a year. When we do reports for the USDA there are several layers of review, editing and whatnot.
“The original motivation was it seemed like there wouldn’t be direct payments in the next farm bill. That (leaning by lawmakers) had been going on for a year, or two.”
With direct payments in jeopardy, “we wanted to use data on hand to conduct the study,” says Ifft. That included the ARMS (Agricultural Resource Management Survey) survey, which contains confidential farm income data as well as a lot of regional data.
“We wanted to lay out the magnitude of direct payments,” says Ifft. “How big are they relative to land values and to revenues at the regional level? What could the potential financial impacts on farms be?”
Among the ERS findings:
• About 21 percent of farms received direct payments, which averaged $8,700 per direct payment farm in 2009.
• Relatively more direct payment farms were in a stronger financial position in 2009 than farms that did not receive direct payments.
• ERS findings indicate that most shifts in financial status for direct payment farms from elimination of direct payments would be a result of lost income and not from lower farmland values.
• Direct payment farms in the Delta and Southeast regions would be most affected by an end to direct payments, which would cause about 13 percent of Delta direct payment farms and 10 percent of Southeast direct payment farms that had favorable status in 2009 to lose this status. These farms would see the most impact because direct payments per farm are higher, on average, in these regions.
Among Ifft’s comments regarding the study: