| 摘要 | Key Points
Congress replaced direct payments with Price Loss Coverage (PLC), Agricultural Risk Coverage (ARC), and Stacked Income Protection Plan (STAX) to ensure that farm program payments arrive only when they are needed.
Congress has rationalized farm payments because they ensure farm solvency and US food security. However, farm bankruptcy rates are low, and the United States is food secure, which implies that these payments are not needed.
Using annual expected crop revenue to identify when a post-harvest farm loss occurs can be used to rank farm programs in their ability to cost-effectively decrease risk.
STAX is more cost-effective when combined with crop insurance than either PLC or ARC is because STAX is targeted at revenue, producers must pay a small premium for STAX, and mistargeting is reduced because of program deductibles. True reform of farm programs would replace PLC and ARC with STAX and make the crop insurance program a privatized supplemental program.
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Executive Summary
The idea that farm payments should arrive only when needed motivated Congress to replace direct payments with Agricultural Risk Coverage (ARC), Price Loss Coverage (PLC), and Stacked Income Protection Plan (STAX) in the 2014 Farm Bill. In contrast to direct payments, which never varied from year to year, ARC and PLC payments arrive only if revenue or prices fall below trigger levels. However, whether payment targeting has improved cannot be determined without first knowing when payments hit the target. Congress has rationalized farm subsidies by arguing that they are needed to prevent farmers from going bankrupt or enhance US food security, which is of little help because farm bankruptcy is so rare and the United States is arguably the most food-secure country in the world.
One potential level to identify well-targeted payments is whether a farmer would suffer a financial loss without a payment. The problem then becomes determining when a loss occurs, given the wide variation in cost structures, crop mixes, and financial circumstances across farms. A proxy for this loss reference point is annual expected revenue, which varies less across farms and is easier for an outsider to calculate.
Simulations across farms with different yield risk attributes show that the combination of crop insurance with STAX is more cost-effective at reducing farm losses than crop insurance with either ARC or PLC. This is because STAX is targeted at revenue, producers must pay a small premium for STAX, and the program deductible reduces mistargeting.
Introduction
The main change in farm subsidy programs in the 2014 Farm Bill was replacing direct payments and countercyclical payments with new programs. Producers with base acres were offered the choice of either Price Loss Coverage (PLC) or Agricultural Risk Coverage (ARC). Cotton producers were not eligible for PLC or ARC because Congress decided to comply with the World Trade Organization ruling against cotton subsidies. In lieu of ARC and PLC, cotton producers were offered a new crop insurance program called the Stacked Income Protection Plan (STAX). Supporters of these new initiatives have argued that the new programs provide farmers payments “only” when they suffer a loss, in contrast to direct payments that arrived regardless of a farm’s financial situation.
Congress originally justified direct payments in the mid-1990s as a way to transition farmers away from reliance on subsidies. As with so many government programs, the time for transition never arrived, so direct payments were paid throughout the agricultural boom years from 2007 to 2013. Replacing direct payments with the new programs was Congress’ response to the political difficulty of justifying payments to producers when profits were high in the farm sector. Recognizing that farmers already had access to a heavily subsidized crop insurance program that is designed to compensate farmers for financial losses, Congress argued that farmers need help covering so-called shallow losses that were part of the crop insurance deductible.
The names of the new subsidy programs are consistent with their ostensible purpose: PLC covers price losses, ARC covers income risk, and STAX protects income. Many economists who study farm subsidy policy have adopted the language of subsidy supporters by referring to these programs as providing a farm “safety net.”1 Some agricultural economists may have adopted this language just so they can refer to PLC, ARC, and STAX in ways that do not antagonize subsidy recipients. However, many economists share Luther Tweeten’s view that farm subsidy programs are simply wealth transfers that result from successful lobbying efforts by groups of wealthy farmers.2
Tweeten would likely object to calling subsidies “safety-net” payments. He would note that the term is intended to legitimize programs for voters and taxpayers who know little or nothing about them. According to Tweeten, the term describes such programs as providing farmers with the support they need to survive in an unreasonably risky business environment, when the programs really just transfer wealth and income to already wealthy households.
The purpose of this article is not to weigh in on the debate about the wisdom of farm subsidies. Rather, it is to provide insight into whether PLC, ARC, and STAX use public funds more efficiently by providing farmers payments only when those payments appear to be needed.
The first step is to explore whether one can measure when a payment is needed. This is not a trivial question. Most of us would likely accept a payment from the government, regardless of any perceived “need” for such payment. However, the direct payments program was eliminated because it was so transparently obvious that such payments often arrived when the farm sector’s need for subsidies was low. Identifying a measure of need seems possible and would be useful in assessing whether payments are being successfully targeted.
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