Updating Corn Program Payment Yields: Are Farm Operators

Crop yields which determine farm income deficiency payments have been frozen at 1981-1985 levels since 1986. Data from a longitudinal survey of Ohio farm operators are analyzed to evaluate whether updating payment yields will differentially affect farm operators. Results of the analysis imply that farm operators who operate larger farms, live in counties with higher yields, and have higher fertilizer and pesticide expenses per acre of corn will benefit more. In addition, low (high) existing payment yields are understated (overstated) relative to updated payment yields. The Food Security Act of 1985 froze crop program payment yields, which in part determine farm in-come deficiency payments, at 1981–1985 levels (Glaser, p. 32). During debate on the Food, Agri-culture, Conservation, and Trade Act of 1990 (FACTA 1990), farm lobbyists argued that these program payment yields should be updated to re-flect a continuing improvement in actual crop yields. Primarily because of budgetary concerns, Congress did not mandate that payment yields be updated; but the Secretary of Agriculture was given discretionary power to update payment yields (FACTA 1990). While the policy debate has focused on budget-ary cost, updating program payment yields also may have differential impacts among farm opera-tors. For example, updating payment yields may benefit large farm operators more than small farm operators because large farm operators may adopt new, yield improving technology more quickly. A review of the literature finds no study of diffet’en-tial impacts among farm operators. Therefore, this study uses data from a longitudinal survey of Ohio farm operators to examine if updating corn pro