Farm Payments:

Implications of Targeting Farm Income Supports

RCED-87-99: Published: Jun 10, 1987. Publicly Released: Jun 10, 1987.

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In response to a congressional request, GAO analyzed possible ways to target a greater share of direct income-support payments to farmers in the greatest financial need, focusing on the potential effects of general targeting options with identified agricultural policy objectives.

GAO found that the option of reducing the current annual payment limit: (1) could potentially reduce income support to higher-income farms; (2) would not provide more income support to lower-income farms, but could provide a greater share of payments to this group; (3) could lower program costs and result in smaller agricultural surpluses; and (4) would likely decrease government control over the supply of program crops. The option of applying lower crop payment rates to large-sized farms and higher payment rates to smaller farms: (1) would direct more income support to low-income farms and reduce that paid to higher-income farms; (2) could make an overall loss of family farms less likely; (3) could reduce agricultural surpluses; (4) would not lead to more efficient program crop production; and (5) would decrease federal government control over the supply of program crops. The option of applying payment rates that decline as production volume on each farm increases would result in effects similar to those from applying different payment rates, with the effect of the options depending largely on the specific payment rates. The option of making payments to farmers based on a financial means test: (1) would provide more income support to low-income farmers and reduce income support to higher-income farmers; (2) could increase incentives for relatively high-cost, inefficient agricultural production; (3) would not achieve better federal government supply control; and (4) would be difficult to administer.

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