Could large crop yield increases stir up controversy for farmers? Possibly - it’s because these larger yields may add up to overcompensation by government price support programs that act as a safety net, according to a report co-authored by Carl Zulauf for the University of Illinois at Urbana-Champaign.
Payment to farmers were once triggered by low commodity prices to help stabilize farm income. But now, payment is triggered by both price and yield declines, according to the report.
However, becuase of large yield increases since 2012, these payments could become a political policy issue, Zulauf says.
In 2015 and expected in 2016, farm revenues are down and so are prices, while yieeds are posting double-digit gains during the same period.
“Increases in yield can moderate low prices, causing revenue/acre to decline less than price,” according to the report. “Hence, a policy that pays on low prices may overcompensate farmers for their economic stress."