Agricultural Economic Report No. (AER-838) 66 pp

October 2004

Decoupled Payments in a Changing Policy Setting

This report analyzes the U.S. experience with decoupled payments in the Production Flexibility Contracts program from 1996 to 2002. The studies in this report consider the effects of decoupled payments on recipient households, and assess land, labor, risk management, and capital market conditions that can lead to links between decoupled payments and production choices. Each study contributes a different perspective to understanding the response of U.S. farm households and production to decoupled income transfers.

Keywords: decoupled payments, WTO, World Trade Organization, PFCs, Production Flexibility Contracts, farm policy, households, well-being, income, wealth, land tenure, consumption, risk, direct payments, trade policy

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