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