Susan E. Offutt

The Future of Farm Policy Analysis: A Household Perspective

Farms, farmers, farm families, and even farm policy have changed since the New Deal. Now it is time to bring the methods of farm policy analysis and the scope of data collection up to date. Agricultural economics, by tradition an empirical discipline, can once again offer important insights into the design, implementation, and effectiveness of policy. To succeed in this century, though, requires an emphasis on understanding microeconomic behavior at the farm household level.

Farm Poverty and Safety Nets

Farm families with incomes below the poverty line are far less likely than wealthier farmers to receive farm support payments. Using data from the 1989-2004 Current Population Survey, we find that poor farm families are also not participating in other assistance programs. Controlling for other factors, eligible farm families have substantially lower participation rates in the Food Stamp Program and in Medicaid than eligible nonfarm families. Removing farm safety net program payments would increase the number of farmers eligible for these programs but, in the absence of behavioral changes, would only lead to small increases in the number of recipients.

INCOME INSURANCE FOR U.S. COMMODITY PRODUCERS: PROGRAM ISSUES AND DESIGN ALTERNATIVES

Concern over the size of outlays for farm commodity programs has led to an interest in exploring the concept of income insurance as an alternative. However, the application of insurance principles to agricultural income risk presents challenges to the design and administration of a sound program. Alternative income insurance schemes are evaluated on the basis of the ability of each to attain consistently a minimum revenue target as well as in terms of premium costs.

Distributional Impacts of the 1986 Tax Reform Act

The 1986 Tax Reform Act (TRA) contains the most sweeping changes in tax laws in the last thirty years, affecting virtually every sector of the U.S. economy. Evaluations of its impacts on agriculture appearing in the farm and nonfarm press have been concerned primarily with commodityand/or producer-specific issues. In this paper, we provide a broader perspective on the interand intrasectoral effects of TRA. First, we examine equity versus efficiency effects of TRA. Next, we identify major changes wrought by TRA and explain briefly how they may alter tax obligations for the farm sector relative to the rest of the economy. Finally, we consider the distributional effects of TRA within the agricultural production sector with a focus on differences by size, type, tenure patterns, and debt level.