Who Really Benefits from Agricultural Subsidies? Evidence from Field-Level Data

The idea that agricultural subsidies are fully capitalized into farmland values forms the foundation of the argument that subsidies are entitlements and removing them would drastically reduce farmland asset values. Surprisingly little evidence substantiates this claim. Using field-level data and explicitly controlling for potentially confounding variables we find that landlords only capture between 14 – 24 cents of the marginal subsidy dollar. The duration of the rental arrangement has a substantial effect on the incidence. Initially, landlords extract 44 cents of the marginal subsidy dollar, but the incidence falls by 1.5 cents with each additional year of the rental arrangement. This duration effect reveals that rental market frictions play an important role in the farmland rental market.


Issue Date:
2010
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/62028
Total Pages:
26
Series Statement:
Selected Paper
11532




 Record created 2017-04-01, last modified 2017-04-26

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