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Agronomy Journal Abstract - Economic Analysis

Government Subsidies and Crop Insurance Effects on the Economics of Conservation Cropping Systems in Eastern Washington


This article in AJ

  1. Vol. 99 No. 3, p. 614-620
    Received: Jan 5, 2006

    * Corresponding author(s): dlyoung@wsu.edu
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  1. Elizabeth L. Naila,
  2. Douglas L. Young *a and
  3. William F. Schillingerb
  1. a School of Economic Sciences, Hulbert Hall 103, Washington State Univ., Pullman, WA 99164-6210
    b Dep. of Crop and Soil Sciences, Washington State Univ., Dryland Research Station, P.O. Box B, Lind, WA 99341


Government subsidies and crop insurance indemnities provide important support for many U.S. farmers. Economists often justify omitting government subsidies when comparing cropping systems because subsidies were decoupled from production in the 1996 Farm Bill. However, coupled loan deficiency payments (LDPs) were continued in the 1996 and 2002 Farm Bills for grains and were extended to several pulses and oilseeds in the 2002 Farm Bill. Furthermore, crop insurance premiums and indemnity payments have always been coupled to production. This paper calculates the impacts of including government subsidies and crop insurance on the results of two long-term cropping systems experiments in eastern Washington. Both studies compared the agronomic and economic feasibility of annual cropping no-till systems with traditional tillage-based winter wheat (Triticum aestivum L.)–summer fallow (WW–SF). Net returns for WW–SF exceeded those for most annual no-till systems in both experiments. No government subsidies or insurance impacts were included in previous analyses of these cropping systems. The present analysis shows that including government subsidies and crop insurance effects does not alter the profitability rankings of the annual no-till vs. WW–SF cropping systems in these experiments. However, including crop insurance indemnities did slightly alter the rankings of the three most profitable no-till systems in one experiment. The exclusion of government subsidies and crop insurance from previous research on conservation cropping systems in eastern Washington produced relatively sound economic rankings. To test the generality of this conclusion, similar comparisons would be required with other crops and in other regions.

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