Direct payments are based on historic acreage and yields of
program crops like corn and wheat and are often considered
"decoupled" because they do not depend on a farmer's current
production decisions. Nonetheless, because direct payments are
linked to past production of program crops and because productive
areas tend to remain productive over time, areas that currently
have higher average yields and more acreage of program crops tend
to receive more payments than areas with lower yields and fewer
acres. This positive association between direct payments and
production of program crops raises doubts about whether direct
payments really are decoupled from current production decisions.
The 2002 Farm Act authorized direct payments for the first time for
oilseed crops, such as soybeans, triggering a sudden shift in
direct payments toward areas with higher average production of
oilseeds. By studying oilseed producers' response to the shift in
payments between 2002 and 2007, ERS researchers found that direct
payments had little effect on production decisions This chart
appears in "Expansion in Direct Payments Did Not Lead to More Crop
Production" in the September 2012 issue of ERS's Amber
Waves magazine.