ABSTRACT
Government programs have important, often unrecognized effects on both costs and returns for many commodities. These effects range from obvious ones like deficiency payments for wheat and corn, to more subtle ones such as implicit subsidies for irrigation water or agricultural assessments that reduce real estate taxes. Government commodity programs clearly have important effects on farmers' planting and harvest decisions. The single, strongest recommendation in the chapter argues that Economic Research Service (ERS) include direct government payments and other quantifiable additions to income resulting from government programs when estimating gross value of production in their annual cost of production reports. Government programs have a direct effect on returns through control over supply and hence in market prices or through direct payments. The effects of government programs on both costs and returns should be identified and assessed wherever possible in the statements prepared annually by ERS.
