Impacts and Incidence of Agricultural Commodity Programs
E. Kwan Choi, Stanley R. Johnson
May 1990 [90-WP 55]
Choi, E.K. and S.R. Johnson. 1990. "Impacts and Incidence of Agricultural Commodity Programs." Working paper 90-WP 55. Center for Agricultural and Rural Development, Iowa State University.
This paper analyzes the incidence of agricultural commodity programs. Producers advocate commodity programs and receive price subsidies, but free entry and perfectly elastic supplies of nonland inputs ensure that landowners extract the entire surplus from price subsidies. Moreover, an increase in the target price raises the land rent more than proportionately. Although landless producers benefit from commodity programs in the short run, they do not in the long run. Roughly 60 percent of program benefits go to producers who own land, and the remainder to landowners.