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Risk-Adjusted Comparison of Conservation Reserve Program Payments Versus Production Payments for a Corn-Soybean Farmer

Published online by Cambridge University Press:  28 April 2015

Gregory Ibendahl
Gregory Ibendahl*
Affiliation:
Department of Agricultural Economics, Mississippi State University, Mississippi State, MS
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Abstract

Conservation reserve program (CRP) payments amount to several billion dollars annually. Payments are allocated to both remove land from production and to help farmers pay for conservation improvements. However, research examining whether farmers increase their utility with CRPs is limited. This paper uses simulation analysis and certainty equivalents to compare farming income to payments under the CRP. Farming income is a combination of crop production and government payments as specified in the 2002 Farm Bill. This analysis focuses on farms in three different counties in Kentucky. Results indicate that CRPs are good choices for many farmers.

Keywords

certainty equivalentsconservationCRPgovernment paymentsrisksimulationQ15Q18Q16C15
Type
Invited Paper Sessions
Information
Journal of Agricultural and Applied Economics , Volume 36 , Issue 2 , August 2004 , pp. 425 - 434
Copyright
Copyright © Southern Agricultural Economics Association 2004

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