Economic Analysis of Base Acre and Payment Yield Designations Under the 2002 U.S. Farm Act

by Edwin Young, David W. Skully, Paul Westcott, and Linwood Hoffman

The 2002 Farm Act provided farmland owners the opportunity to update commodity program base acres and payment yields used for calculating selected program benefits. Findings in this report suggest that farmland owners responded to economic incentives in these decisions, selecting those options for designating base acres that resulted in the greatest expected flow of program payments. Farmland owners with high-payment base acres, such as rice and cotton, held on to these base acres and, whenever possible, expanded them. Analogously, farmland owners with low-payment commodity base acres, such as oats and barley, switched to higher payment commodities whenever possible.

Keywords: base, 2002 Farm Act, direct payments, counter-cyclical payments, production flexibility contract payments, base acres, program yields

In this publication...

• Entire Report
• Report Summary
• Abstract, Acknowledgments, Contents, and Summary
• Introduction
• Role of Base Acres and Program Yields in U.S. Agricultural Policy
• Planting Flexibility Allowed Movement Away From Base Acres
• The 2002 Farm Act
• Economics of Base Designation
• Evaluating the Base Updating Decision
• Influence of Base Updating on 2003 Planting Decisions
• Conclusions
• References
• Appendix