The Unintended Beneficiaries of Farm Subsidies

Abstract

From 2011 to 2017, the U.S. government paid farmers $6 billion annually in decoupled subsidies. Around 60% of cropland is rented, so if landlords raise rents in response to subsidy payments, the subsidies may not benefit the farmers as much as intended by policy. The Agricultural Act of 2014 linked subsidy payments to county characteristics and idiosyncratic yields. Instead of payments tied to farm-level productivity, which challenged identification under earlier programs, the programs offer a new path for identifying subsidy incidences. We find rents increase by approximately $0.45–$0.65 for every dollar received, roughly double what prior research found.