Production Incentives from Static Decoupling: Land Use Exclusion Restrictions. (30th August 2013)

• Record Type: Journal Article
• Authors: Just, David R.; Kropp, Jaclyn D.
• Is Part Of: American journal of agricultural economics. Volume 95:Number 5(2013)
• Page Start: 1049
• Page End: 1067
• Publication Date: 2013-08-30
• Subjects: agricultural support -- coupling -- decoupled payments -- exit deterrence -- land allocation -- production distortion -- use restrictions -- trade distortion; Agriculture -- Economic aspects -- Periodicals; Agriculture -- Periodicals; 338.105
• DOI: 10.1093/ajae/aat060
• Languages: English
• ISSNs: 0002-9092

Abstract

Abstract: Many agricultural support payments are based on past production with restrictions on how land may currently be used. When support payments to field crops are analyzed in a static framework, they do not directly impact current production decisions. However, over time, as relative profits change, these payments affect current output. The payments may keep land in less profitable production of program crops through restrictions prohibiting potentially more profitable endeavors such as cultivating fruits and vegetables. These payments have the potential to lead to production and trade distortions similar in magnitude to the distortions associated with direct production subsidies.