Effects of Farm Bill Commodity Subsidies on US Corn Production, Farm Income, and Market Price
Journal IssueVolume 20, 2013
This paper outlines the effects of farm bill subsidies on corn farmers’ planting decisions, overall production, corn farmer income and market price of corn. The author utilizes a series of real and hypothetical market prices to demonstrate the particular combinations of subsidies that are available for corn farmers under varying market conditions. Research suggests that certain subsidies are theoretically capable of increasing production above normal levels when prices of corn fall below a certain threshold. However, in practice, prices of corn have not fallen below this threshold for extended periods of time, and thus this scenario has rarely presented itself historically. The author concludes that because they provide income support for corn farmers and create a safety net for corn prices, these subsidies represent an incentive in itself to grow corn over other non-subsidized produce. Thus, it is possible that corn subsidies have led to the growth of the industry over time by influencing the choices that farmers have made throughout history upon entering the market, rather than by influencing day-to-day planting decisions throughout the crop season.