Effects of Changes to Farm Program Payment Policies on the Distribution of Payments and Income Inequality of Farm Households

In recent years, increasing attention has focused on the distribution of government payments, especially the share of payments that go to large farms and high-income farm households. Farm commodity program payment limits were first introduced in the Agricultural Act of 1970. The Farm Security and Rural Investment Act of 2002 for the first time supplemented program payment limits with a cap on the income farmers could earn and still receive farm program payments. The 2008 Farm Act tightened payment limitations on some producers and replaced the total adjusted gross income (AGI) limit with separate lower caps for the farm and nonfarm components of AGI. This research uses data from the Agricultural Resource Management Survey (ARMS), a survey of farm operator households conducted annually by the U.S. Dept. of Agriculture, to examine the impact of government payments and changes in payments as a result of changes to farm program policies on income inequality among farm households.