Essays on modeling farm policy in the post-subsidy era

Amber A Remble, Purdue University

Abstract

The strong performance of agriculture has brought subsidy spending programs under scrutiny, leading to a new set of policies ending direct income support to farmers for insurance like payments. This redirection of farm programs is just one signal that future farm policy will be less about distributing money to farmers, and more about how agriculture interacts with the broader economy, federal budget, and policy landscape. We describe this future as the "post subsidy era", and argue that given the heterogeneity in U.S. agriculture, agricultural interests that seek to find best policy solutions will have to concentrate effort on the impacts of other federal policy issues and their idiosyncratic mechanisms, rather than ramping up effort to secure large checks for agriculture in the farm bill process. The "post-subsidy era" will have an impact for policy analysts as well. Standard farm subsidy commodity models adapted to other policies will not suffice. Capacity to measure non-agricultural policy impacts for farm households in a set of modeling frameworks designed for that purpose is necessary. In the analysis chapters of this dissertation, we begin that effort. First, we investigate greenhouse gas (GHG) emissions in agriculture using a detailed framework with special attention to GHG indicator design. We find that GHG production is influenced by most on-farm input decisions that are not captured in current models. Thus, estimates of farm abatement costs for GHG will be overstated in current models due to disconnect between farmer response to GHG restrictions and model predictions. We then proceed to partial equilibrium analysis of immigration in agriculture. We identify the role of labor substation in estimating the benefits of agricultural friendly immigration reforms, showing significant heterogeneity in the benefits to agriculture from an increased migrant labor pool. We find that technical factors differ and are primary in determining migrant labor benefits. While fruit and vegetable sectors are improved from free labor movement, much of commodity agriculture sees only modest impact. In fact, the wage depressing effects of in migration could be overwhelmingly negative for row-crop commodity regions. The thesis concludes with recommendations for future modeling efforts in post-subsidy era policy.

Degree

Ph.D.

Advisors

Keeney, Purdue University.

Subject Area

Agricultural economics

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