Who Benefits from Agricultural

Subsidies

(It’s not who you think!)

A farmer is a man out standing in

his field

A farmer is a man out standing in

his field

New and emerging research on

the capitalization of agricultural

subsidies into farmland values

DO WE REALLY KNOW WHAT WE THINK WE KNOW?

“That question has already been answered.”

• Anonymous advisor

“One of the things that I think is fairly well

agreed upon…is that the way in which

[subsidy programs] affect farmers’ income is

[by] holding up land values and land rental

values”

• Bruce Gardner (2001)

“The capitalization of program benefits into

land values has in recent years been

carefully documented.”

• Vernan Ruttan

“The [government program] coefficients are

biased upward” because they are “inclusive

of the value of cropland when what is

desired is the allotment values [sic] alone.”

• James Hedrick (1962)

20¢

“I don’t know how you are wrong, but your

wrong.”

40¢

Short Term

20¢Long Term

40¢

Study Location Incidence

Woodard et al. (2012) Illinois 19-30%

Kirwan & Roberts (2013) U.S. Soybeans 21%

Breustedt & Habermann (2001) Germany 38%

Van Herck & Vranken (2011) New EU-Member States 15%

Patton et al. (2008) Northern Ireland 1.19%

DO WE REALLY KNOW WHAT WE THINK WE KNOW?

“[T]he constraining force of custom and

public opinion ... resembled the force which

holds rain-drops on the lower edges of a

window frame: the repose is complete till the

window is violently shaken, and then they

fall together.”

• Alfred Marshall

“Why would I raise the rent on my farmer? I

want to make sure he keeps on farming.”

DO WE REALLY KNOW WHAT WE THINK WE KNOW?

DO WE REALLY KNOW WHAT WE THINK WE KNOW?

Who benefits from agricultural

subsidies?

Tenant farmers and small farmers