Assessing Participation in the Milk Income Loss Contract Program and its Impact on Milk Production

The MILC program, a counter-cyclical income support program, was designed to provide price support to dairy farmers. Since the inception of the MILC program it has been argued that the program is inefficient and rewards inefficiency by keeping high cost, small dairy farms in business. Large dairy producers have expressed concerns that the MILC payments have negatively affected their farming income. Using farm-level, ARMS data from 2005, this study investigated the factors that affect farmer’s decision to participate in MILC program and if participation in MILC has an impact on milk production. The results show that participation in MILC program is positively correlated with farmer’s educational attainment, organic certification subsidy, milk price, off-farm work by spouses, and financial record keeping. Further, medium sized dairy farms are more likely to participate in MILC program. Finally, results indicate that participation in MILC program has a positive impact on milk production.dairy farms, agricultural policy, Milk Income Loss Contract Program, two-step probit estimation, Agricultural and Food Policy, Livestock Production/Industries, H20, Q13, Q18,

Predicting Financial Stress in Young and Beginning Farmers in the United States

Financial stress, Young and Beginning farmers, farm type, farming regions, operating leverage, Agricultural and Food Policy, Agricultural Finance, Farm Management,

Effect of health insurance coverage on labor allocation: Evidence from US farm households

In the past three decades, farm families have relied on government payments and off-farm income to reduce income risk and increase total household income. Many studies have analyzed the role of government payments; however, little is known about the impact of health insurance coverage on labor allocation. This study builds on previous literature by using copulas to test for dependence in the labor allocation, addressing the importance of fringe benefits to the farm household, and determining how these considerations affect our knowledge of the impact of fringe benefits on off-farm labor. The results indicate that the off-farm hours worked by the operator and spouse are jointly determined; health insurance coverage is an endogenous variable. Using the predicted probability of insurance coverage and joint estimation techniques, we find a positive and highly significant relationship with the hours worked off-farm. Further, we find that both coupled and decoupled payments are negatively correlated with the hours worked off-farm

Determining the Nature of Dependency between Agribusiness and Non-Agribusiness Stocks

During the financial downturn of 2008, asset classes that investors traditionally found to have low correlation with U.S. stocks became more highly correlated at the most inopportune time. Post-downturn, investors increasingly looked for alternative assets that offer diversification benefits, one of which being farmland. One of the challenges of investing in farmland is that the asset is not a securitized, low-cost investment. The current research investigates the whether exposure to farmland via an index of agribusiness stocks provides significant diversification benefits. We estimated the dependence between daily returns of the S&P 500 and an index of agribusiness stocks from 1970 through 2008 using copulas. We find significant evidence that agribusiness stocks have strong lower tail dependence with large U.S. stocks and are actually less correlated in the upper tail of the distribution. Meaning, the agribusiness index moves in near lockstep with U.S. stocks in downturns and more independently in large upswings. This provides little evidence to support the investment strategy of purchasing agribusiness stocks broadly to gain exposure to farmland

Health Insurance and Joint Off‐Farm Labor Allocation Decisions of Farm Families

Farm operators and spouses have increasingly engaged in off-farm work in recent years. Many studies have analyzed the role of government payments; however, little is known about the impact of health insurance coverage. This study builds on previous literature by using copulas to test for dependence in the labor allocation decisions of the operator and spouse, addressing the importance of fringe benefits to the farm household, and determining how these considerations affect our knowledge of the impact of government payments on off-farm labor. The results indicate that the off-farm hours worked by the operator and spouse are dependent. We then find significant evidence of endogeneity in the health insurance coverage variable. Using the predicted probability of insurance coverage, we find a positive and highly significant relationship with the hours worked off-farm. Further, we find that both coupled and decoupled payments are negatively correlated with the hours worked off-farm

Agricultural Policy and Its Impact on Labor Migration from Agriculture

Recent generations of farmers have experienced considerable difficulties earning a consistent living wage to support the needs of themselves and their families. To meet these needs, many farmers and their spouses have increasingly left the agricultural industry to seek employment. Previous studies have found government policies intended to slow the migration of labor from agriculture have little influence. Using an autoregressive distributed lag model and adjusting for non-stationary variables in the labor migration equation, direct government payments were found to have a negative and significant effect on labor migration from agriculture

Assessing Participation in the Milk Income Loss Contract Program and its Impact on Milk Production

The MILC program, a counter-cyclical income support program, was designed to provide price support to dairy farmers. Since the inception of the MILC program it has been argued that the program is inefficient and rewards inefficiency by keeping high cost, small dairy farms in business. Large dairy producers have expressed concerns that the MILC payments have negatively affected their farming income. Using farm-level, ARMS data from 2005, this study investigated the factors that affect farmer’s decision to participate in MILC program and if participation in MILC has an impact on milk production. The results show that participation in MILC program is positively correlated with farmer’s educational attainment, organic certification subsidy, milk price, off-farm work by spouses, and financial record keeping. Further, medium sized dairy farms are more likely to participate in MILC program. Finally, results indicate that participation in MILC program has a positive impact on milk production

Health Insurance and Joint Off‐Farm Labor Allocation Decisions of Farm Families

Contact author to request a copy of this paper.Health insurance coverage, endogeneity, copula, off-farm labor supply, dependence, bivariate tobit, coupled farm programs payments, decoupled farm program payments, Agribusiness, Farm Management, Food Security and Poverty, Labor and Human Capital, Public Economics, C34, I13, J12, J22, J38, J43, Q12, Q18,

Welfare Implications of a Reduction in Government Payments: The Role of Fringe Benefits

In the past three decades, farm families have relied on government payments and off-farm income to reduce income risk and increase total household income. Studies have shown that, as income effect dominates, government payments tend to reduce off-farm labor of farm operators and spouses. But that may not be true if one accounts for fringe benefits associated with off-farm employment. Additionally, with looming budget deficits and the possibility of a reduction in decoupled government payments, farm families may be facing an altered economic environment. Our study addresses this issue by examining the links between government farm program payments and the ever-important role of fringe benefits in the off farm employment of farm couples. Result from farm-level data actually show that the marginal effect of government payments on hours worked off-farm will decrease in magnitude when accounting for fringe benefits, ceteris paribus. These results support the notion that farm households’ welfare loss stemming from reduced decoupled payments may be overstated when models exclude fringe benefits from the estimation of off-farm labor supply