Explaining Variation Across Counties in 2019 MFP Payment Rates

On July 25, 2019, the United States Department of Agriculture released information about the second edition of the Market Facilitation Program (MFP2). MFP2 will pay farmers a per-acre subsidy on 2019 planted acres for a set of non-specialty crops, including alfalfa hay, barley, canola, corn, cotton, dried beans, dry peas, flaxseed, lentils, millet, mustard seed, oats, peanuts, rapeseed, rice, rye, safflower, sesame seed, sorghum, soybeans, sunflower seed, triticale, and wheat . The per-acre payment rate for these non-specialty crops is the same for all acres in a county but varies considerably across counties. Some counties will receive MFP2 payments of $15 per acre, while others will receive $150 per acre. Within the state of Kansas, county-level payment rates range from $22 to $73 per acre.

In this article, I explain variation in MFP2 payment rates across counties by estimating commodity-specific payment rates. I show how these commodity-specific payment rates could have been used to generate the observed distribution of county payment rates. Essentially, I attempt to reverse-engineer the formula that determined MFP2 county-level payment rates.

To view the entire article: http://agmanager.info/crop-insurance/risk-management-strategies/explaining-variation-across-counties-2019-market

The KSU Ag Econ extension web page is located at: http://www.agmanager.info.

Source: Kansas State University