UNFREEZING PROGRAM PAYMENT YIELDS: Consequences and Alternatives

"Program" yields for individual farmers are utilized in determining the amount of deficiency payments individual farmers receive. They have been frozen since the 1985 Food Security Act (FSA). However, some farm groups are pressing for unfreezing these yields so that actual yields could be substituted for the program yields when the actual yields are higher. This change would indeed lead to higher deficiency payments. However, it would also stimulate increased fertilizer and pesticide use Ultimately resulting in lower net returns to producers. A preferable approach would be to index upward all producer program yields by the same amount.