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Evidence of Distortionary Effects of Decoupled Payments in U.S. Indica Rice Production

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  • Anthony Becker
  • Rebecca Judge
Abstract
Using a generalized method of moments technique for dynamic panels we estimate the acreage response of indica rice production in the U.S. to decoupled payments under the 1996 and 2002 farm bills. We find that these payments exert significant effects on the number of acres planted and, although the response is inelastic, a given change in decoupled payments may have a greater effect on acreage planted than an equal change in payments directly linked to output. Thus, even purely decoupled payments may be vulnerable to WTO sanction or de minimis limits. This research also suggests that the subsidy formula in the proposed 2014 farm bill will have a reduced distortionary effect compared to existing policies. Copyright International Atlantic Economic Society 2014

Suggested Citation

  • Anthony Becker & Rebecca Judge, 2014. "Evidence of Distortionary Effects of Decoupled Payments in U.S. Indica Rice Production," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(3), pages 265-275, September.
    • Handle: RePEc:kap:atlecj:v:42:y:2014:i:3:p:265-275
    DOI: 10.1007/s11293-014-9421-7
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    3. Thompson, Wyatt & Gerlt, Scott & Dewbre, Joe H. & Effland, Anne B., 2020. "Rescuing the Decoupling Literature from Incomparable Chaos," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304366, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Decoupled payments; Agricultural subsidies; Rice; Farm bill; Dynamic panel data; Q12; Q17; Q18; H25;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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