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K-State Today

December 8, 2021

Agricultural economics professor receives best article award

Submitted by Mary Bowen

Nathan Hendricks, agricultural economics professor, along with Joe Janzen, assistant professor at the University of Illinois Urbana-Champaign, received the Applied Economic Perspectives and Policy, or AEPP, Best Article Award with their article, "Are Farmers Made Whole by Trade Aid?"

The AEPP journal is published by the Applied Agricultural Economics Association to share high-quality research in a forum that is informative to a broad audience of agricultural and applied economists, including those both inside and outside academia.

The article addresses one of the most important issues in the U.S. farm policy over the past three years: the unprecedented surge in ad hoc government payments to U.S. farmers.

"Between 2018 and 2020, the United States Department of Agriculture made two rounds of Market Facilitation Program, or MFP, payments totaling $23 billion as compensation for market losses caused by trade retaliation from countries such as China. This trade retaliation concentrated on U.S. agricultural exports as part of a larger global trade conflict," Hendricks said. "These payments were so large and the programs to distribute them developed so quickly that many questioned their size and distribution. For example, the Senate Committee on Agriculture issued a Minority Staff Report suggesting MFP overcompensated certain regions and crops."

The article explains how the trade war impacted exports and prices for each commodity and how these impacts compare with the Market Facilitation Program, payment rates. They compare payments across counties of the United States and use farm-level data to discuss how payments for an individual farm changed from the first to second round of payments based on differences in farm characteristics within the same county.

The three key findings of their research found that Market Facilitation Program payment rates generally followed export losses across commodities, but that the payment rates generally exceeded short-run price impacts estimated by economists — with larger differences for some commodities; although aggregate payments were largest in Corn Belt states, the payments per farm were largest in Southern counties; and payment rates exceeded short-run price impacts, but the program may not compensate for long-run damages caused by the trade conflict.

"While several groups created maps of payment rates on per acre terms or total payments per state, our paper was the first to create county-level maps of payments for an average-sized farm and payments relative to rental rates," Hendricks said.

Along with receiving the AEPP best article award, the research was also cited by major print media outlets such as The New York Times, Bloomberg, NBC News, DTN/Progressive Farmer, Agri-Pulse, Successful Farming and others.

"It is a great honor to have our article selected by the editors of the AEPP as the outstanding article," Hendricks said.