Decoupled farm payments and the role of base acreage and yield updating under uncertainty

Arathi Bhaskar, John C. Beghin

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


We analyze the coupling effect of expectations about base acreage and yield updating in future farm policy on production decisions in the presence of price, yield, and policy uncertainty for a risk-averse farmer producing a single crop.The farmer receives market revenue and government payments. Using stochastic dynamic programming, optimum decisions under present value calculations positively link current acreage and fertilizer decisions to future government payments through expected updates of base acreage and yield in the future regime.Moving from a zero probability of updating to a probability of one increases optimum acreage and yield by 6.25% and 0.134%, respectively.

Original languageEnglish (US)
Pages (from-to)849-858
Number of pages10
JournalAmerican Journal of Agricultural Economics
Issue number3
StatePublished - Apr 2010
Externally publishedYes


  • Base acreage
  • Decoupled payments
  • Expectations
  • Program yield
  • Updating

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics


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