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ABSTRACT

THE AGRICULTURAL CORSERVATION PROGRAM'S COST SHARE
ASSISTANCE TO SIZE RANKED FARMS: A DESCRIPTION

0? RE TIVE PROPORTIONS

The distribution of benefits derived from public expenditures has
frequently been a program objective itself, or at least, an equity constraint
on public investment decisions. This study is a descriptive analysis of the
Agricultural Conservation Program (ACP) payment distribution among size
ranked recipient farms. This study provides (1) emperically derived Lorenz
curves of the cumulative percentage distribution of ACP payments for 1964 in
relation to size ranked farms, and (2) Gini concentration ratios that sum-
marize the Lorenz curve relationships. It is believed that with this analysis
program managers and policy analysts may be better informed regarding distri-
butional aspects of this program and their policy implications.

Through more than 60 specific practices, ACP is intended to (l) restore
and improve soil fertility, (2) reduce erosion caused by wind and water, and
(3) protect and improve water for agricultural use. Operating through state
and county conservation committees, the federal government provides funds for
a specified portion of adOption cost for approved conservation practices. The
prOportion of a farmer's out-of-pocket costs financed through federal funds
generally averages 50 per cent, although allowances may be higher if the local
committee receives approval. Through this mechanism of economic incentives,
farmers are induced to adopt conservation practices which, presumably, lead
to achievement of program objectives. The study provides a capsule summary
of the operations and historical funding levels for ACP.

The distribution of ACP direct payments among size ranked farms for 1964

was displayed on two geographic levels; first on a national basis, and

secondly on a state-by-state basis. In each case, the payment distributions
were analyzed by participating farms (existing participants) and all farms
(maximum eligiblcs).

It was found that 1964 AC? payments were concentrated somewhat among
larger participating farms. A higher concentration was found among larger
farms when all potential eligibles were considered, thus suggesting that non-
participants generally had smaller farms--at least for 1964.

Selected regional differences were found in the 1964 payment distribution.
The Southeastern States, for example, consistently demonstrated a higher con-
centration of payments among larger farms than what was the case for Western
States.

The study included a brief assessment of program participation over time.
It was found that the number of participants over the five years from 1959
through 1964 was twice the amount for 1959 alone--even though the program
funding remained about constant. It would seem that monies were disbursed in
rotating fashion from year to year among farmer beneficiaries.

A major problem encountered in this study was the lack of data on con-
servation needs for farmland by size of farm. In the absence of this infor-
mation, it was difficult to determine whether or not ACP payments are distri-
buted among eligible participants due to conservation needs or some alternative
rationale. To try to answer this question, the cost share distribution was
related to farmland on participating farms by size of farm. Even with the
data difficulties, it was clear that smaller farms were receiving a greater
PrOportion of payments than the proportion of farmland under their control.
This finding is a startling contrast to the earlier analysis of payments to

farms.

The crucial question then became: Why should ACP payments be distributed
more than prOportionately to farmland on smaller farms? A comparison of the
payment distribution for ACP to other selected commodity programs provided
some insight. It was found that the Agricultural Conservation Program was
something of an anomaly compared to these Other agricultural programs. ACP
payments were distributed much more proportionately among participants than
any of the other programs considered. It would seem that ACP monies were
distributed more based on the existence of the farm as an entity rather than
the acreage, or lack of acreage, under its control.

Joint consideration of the comparison of ACP to other agricultural
programs and the large number of ACP participants over time, leads to the
inference that the Agricultural Conservation Program has played a significant
political role in addition to or in spite of the stated objectives of soil
and water conservation. he study suggests that ACP has been used as a

mechanism for gaining widespread political support for agricultural programs

generally.

THE AGRICULTURAL CONSERVATION PROGRAM'S
COST SHARE ASSISTANCE TO SIZE RANKED FARMS: A DESCRI TION

OF RELJTIVE PROPORTIONS

BY

Jth Herbert Stierna

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements

for the degree of

i£S"EP OF SCIENCE

Department of Agricultural Economics

1970

1
Ni. _ - Y “ n _
CA ACKhOw’LaDuMEkTS

The author wishes to express his thanks to several people who assisted
and advised him in the course of this study.

Dr. James T. Bonnen, Professor of Agricultural Economics, provided
thoughtful guidance and assistance throughout much of this study. The author
wishes to express his gratitude to Dr. Bonnen for encouragement on this study
and on the author's long-term professional objectives.

Dr. Harry Brainard and Dr. Milton Steinmuller contributed to the study
through raising important questions regarding application of research findings
to policy deliberations. They also guided the author in selected courses at
Michigan State University.

The Michigan State University Computer Center and Mrs. Carolyn Thomas
provided computer and programming assistance on the data tabulations required
for this study.

The author's wife, Ruth Ellen Stierna, deserves special acknowledgment

for her patience and understanding during the long course of this investigation.

ii

ACKNOWLEDGMENTS

Chapter

I.

II.

III.

IV.

V.

INTRODUCTION . . . . . . . . . . . . . .

Objectives

Approach

Selection of Indicators
Analytical Methodology
Data Analysis

THE AGRICULTURAL CONSERVATION PROGRAM .

Conservation Needs
Incentives

Program Vechanics

Fund Disbursement

Trends in Program Assistance
Program Practices

APPROACH AI‘D PETFLOUOLOGY o o o o o o o 0

Selection of Measures
Measurement of Farms

Lorenz Curve
The Gini Ratio
Procedures

THE DISTRIBUTION OF ACP PAYMENTS . . .

Average Payments Per Farm
Share of Payments
Analysis by States

ANALYSIS OF THE ACP PAYMENTS DISTRIBUTION

Factors Behind Non-Participation In ACP
Penetration

Distribution Analysis

Program Comparisons

Concluding Remarks

BIBLIOGRAPHY

iii

Page

ii

O\O\U'IU'IU)

10
11
11
13

19

20
21
22
23
25

26
26
26
32
38
38
39
41

49
52

55

59

10.

11.

12.

13.

14.

15.

LIST OF TABLES

Trends in ACP Cost Share ASsistance: Five Year
Average Annual Rates of Assistance and Partici-
O

pation, 1936-1964. 0 0 O O O O O O I 0 O 0 O O O O O I
Regular ACP Conservation Practices . . . . . . . . . .

CP Assistance by State . . .

:1";-

Practice Shares of 1964

Average Pa‘ment Per Partic; ating Farm for Selected
Size of Farm Categories, 19

tion Program . . . . . . . . . . . . . . . . . . . . .

Share of 1964 ACP Total Payments Received by Each
Fifth of Size Ranked Farms . . . . . . . . . . . . . .

Lorenz Curve of 1964 ACP Total Payments Among

Size Ranked Particiiating Farms, United States . . . .
Lorenz Curve of 1964 ACP Total Payments Among A11
Size Ranked Farms, united States . . . . . . . . . . .

Comparative Distribution of Participating Farms by
Size Class, Agricultural Conservation Program, 1964 .

State Comparisons of ACP Payment Concentration Ratios
Among Participating Farms . . . . . . . . . . . . . .

State Comparisons of ACP Payment Concentration Ratios
Among A11 Farms 0 O O O O O O O O O O O O O O I O O 0 I

Spread of ACP Payment Concentration Ratios Among

States 0 O 0 O O O O 0 O O O O O O O O O O O O O O O 0

Comparative Distribution of Participating and Non-
Participating Farms With Less Than 180 Acres of
Farmland for Selected States, 1964 Agricultural
Conservation Program . . . . . . . . . . . . . . . . .

Average Payment Per Acre of Farmland in Participating
Farms by Size of Farm, United States . . . . . . . . .

Average ACP Payment Per Acre of Farmland on Parti-
cipating Farms by Size of Farm, 1964 Agricultural
Conservation Program by State. . . . . . . . . . . . .

Lorenz Curve of 1964 ACP Total Payments Among Acreages
of Farmland on Size Ranked Participating Farms in the
UHitéd States. 0 o o O 0 o o o o o o o O O O o o o O o

ACP Payments Compared to Selected Dollar Measures
by Quintile Groups and the Highest Five Per Cent

fl

of Farms and Farmer BeneIiCiaries . . . . . . . . . .

iv

Page

12

14

16

27

27

29

3O

31

33

35

36

37

43

44

46

51

LIST OF ILLUSTRATIONS
Figure Page

1. Theoretical Operation of ACP Cost Share Incentive

Payments 0 O O O I 0 O 0 O O O I 0 O O 0 I O O O O O O I O O 9
2. Graphical Presentation of a Lorenz Curve . . . . . . . . . . . 24
3. The Relationship of Payments, Numbers of Farms,

Farmland and Farm Size . . . . . . . . . . . . . . . . . . . 48

ChAP R I

H
:11

INTRODUCTION

Public policy, in the broadest sense, attempts to accomplish a social
objective by directing specific actions, programs, or agencies down a
determined path which, presumably, will lead to the desired end. Contro-
versy surrounds some programs regarding disputed objectives, particular
courses of action, or on external effects which may be associated with the
action.

This study is addressed to one public program that annually disburses
about $200 million to promote soil and water conservation--the Agricultural
Conservation Program (ACP). A descriptive analysis of the payment distri-
bution among recipient farms is the central purpose of the investigation.
The investigation is relevant for public policy since the distribution of
program benefits is itself often a program objective and, in any case,
unique equity ”constraints” seem to fall upon public investment decisions
compared to decisions normally classed as private.

Public investments are motivated by a social benefit accruing to the
public at large with little or no expectation of monetary profit. Many of
the benefits of public programs in America today cannot be measured in

l ., .-. . .
dollar terms. However, public programs are generally constrained by the

 

l
Theoretically, returns from a public program would be measured by the

quantity of public goods demanded times the appropriate per unit value. How-
ever, public goods frequently have no market prices, thus quantities demanded
are influenced. Measurement of program benefits therefore is exceedingly
difficult.

size of potential external benefits inuring to private persons or groups.
Mississippi Congressman, Jamie L. Whitten, voiced this concern over ACP's
payment distribution recently during appropriation hearings for the Agri-
cultural Stabilization and Conservation Service (ASCS) when he said:
A few years ago, we came to recognize that the benefits of the ACP
program should be diStributed widely throughout the country, and
we managed to keep a $2,500 limitation on the total payment to any
one person.

Actually, three concerns are expressed in his statement. The first is
that program benefits should be distributed widely. Secondly, geographical
areas are the units over which dispersion is to be made. Thirdly, providing
a dollar ceiling for payments per person is an effective (or at lease work-
able) means of achieving this wide geographical distribution.

In contrast, private action is usually characterized by monetary in-

centives, whether they accru‘ in the long or short run. Little care or

(1

interest is expressed in generating monetary externalities. The "best"
private action is the one contributing the most to the firm's profits, re-
gardless who else benefits.

Part of the reasoning behind this apparent difference in attitude for
externalities is the multiple-objective nature of public action. Further
insight comes from a philosophical difference in approach. Frequently,
private entities approach a problem by thin“ing in terms of product or ob-
jectives. To achieve a specified objective the company decides to follow

any of a number of alternative courses of action. The decision is based on

 

 

u.S., Congress, House, stbcommittee of the Committee on Appropriations,
Hearin3C Denartnent of Atriculeur Appropriations for 1970 9lst Con . lst
j 3 ‘ J L ‘ i ’ ’
Sess., 1969, p. 164.

effectiveness and efficiency. In sharp contrast, however, many public of-
ficials think in terms of actions, e.g., if this or that action is taken,
what will be the result? Will it meet a need? Will it have other effects?
Decisions may or may not be related to effectiveness, efficiency, or equity.

The anticipated beneficiaries of public investment in soil and water
conservation practices (exemplified by ACP) are members of the public at
large. The rationale is that conservation practices provide direct benefits
to downstream areas that do not directly support the costs of these practices.
ACP overcomes this problem by the federal government bearing the portion of
costs that generate public benefits.

Mississippi Congressman, Jamie L. Whitten, expressed this general philo-
SOphy during recent appropriation hearings regarding ACP. He described the
purpose of the program as insuring that farms do not wash down creeks and
natural river courses. The beneficiaries he identifies are "ourselves and
posterity” while discounting the desire for the federal government to be look-

ing after farmers specifically.l

Objectives

 

This study is intended to shed light on one specific facet of public
investment in natural resources-~the distribution of 1964 Agricultural Conser-
vation Program payments among size ranked farms. Since farms are the immediate
beneficiaries, it may be useful to determine what distribution exists for pay-
ments.

The intent of this Study was not to analyze either the effectiveness or

efficiency of the Agricultural Conservation Program. Accordingly, conclusions

 

 

on cost effectiveness or even success in achieving objectives cannot be found
on these pages.

The thesis addresses the question of equity--but in a descriptive role
as opposed to a normative evaluation.

The objectives of this study do not necessarily suggest that ACP pay-
ments should be distributed completely in accordance with the number of farms
in a specified size range or to a size ranked distribution of farms. To do
so would neglect the effectiveness and efficiency of the conservation program.
Differences in conservation needs can be expected to exist among farms and if
a quota system were deve10ped to allocate cost share monies solely on the basis
of farm size, it is unlikely that the program would be most effective. How-
ever, investigation of payment distributions should provide program managers
and policy decision makers with additional information for evaluation of
alternative means of obtaining social objectives--especially in light of the
growing concern over distributional effects of public programs.

The benefits under consideration in this analysis are limited to the
direct payments from the federal disbursing agency to individual farm reci-
pients under the Agricultural Conservation Program. It does not consider the
further benefits that may be of economic importance to the farm operator or
to the processor of agricultural products, or to the ultimate consumer of such
products. Further, the benefits of flood control, drainage, irrigation, soil
maintenance are not considered in any way. The central and exclusive objective
of the analysis is how the actual payments under the ACP program are distributed
over participating and all potential farms when such farms are ranked by a

size classification.

U1

The approach used to accomplish these objectives was to develop rela-
tionships between farms and payments and then to compare aetual to proportion-

ate distributions.

Selection of Indicators

 

Measurement of pa\men “spread” among recipients can be based on several
alternative indicators or descriptors of value. Total payments were selected
for use in this study. Since data were not available, analysis of payments by
specific practice was not possible. The final measure selected for use was
the dollar amount of gross ACP cost share payments.1a2 Farms were defined in
accordance with established Agricultural Stabilization and Conservation Service

procedures and are not compatible with the Census of Agriculture definition.3

 

Farms were treated two ways in the analysis. First, the payment distri-
bution was related to only the farms actually receiving some federal assistance
for conservation purposes under ACP. Participating farms are those farmers who
have adopted, in the specified year, approved conservation practices.

The second treatment related the ACP payment distribution to all ASCS
defined fa ms--participators and non-participators alike. A11 farms would
be the maximum pocential extent of program participation. This provides informa-

tion on program participation as it affects payment distributions.

 

lThe naval stores conservation reserve program and the emergency conserva-
tion measures that are treated separately in ASCS records and receive separate
appropriations have not been considered in this study.

2U.S., Agricultural Stabilization and Conservation Service, Agricultural
Conservation Program, 1964 Frequency Distribution of Farms and Farmland,
(Washington: U.S. Government Printing Office, 1966).

3Farms are defined by ASCS as those farm units that are eligible for and
which apply for marketing quota and acreage allotment programs. In contrast,
the census definition is based on dollar sales and acres of land area.

 

Analitical Methodology

 

Methodologies for the measurement of dispersion vary depending on the
precise purpose of the analysis. In this study, Lorenz curves and Gini con-
centration ratios were used. The reason for selecting this approach was two-
fold:

l. The results would be reasonably comparable to other work

undertaken by Bonnen and Boyne and thus allow a few
inferences to be drawn by program comparisons.1
2. A simple quantitative index of dispersion can be derived
from these procedures and thus permit subsequent statisti—
cal analysis.
The methodology entails a comparative proportionality analysis between

payments and farms--each ranked by size groups.

Data Analysis

 

Results from the computed Lorenz curves and Gini ratios were analyzed
for national and state levels. Factors which might explain the state-to-

state variation in payment distribution were identified and analyzed. Finally,

U

normative inferences ar< drawn from the descriptive information analyzed. Com-

r.

parisons were made with other similar studies recently made on other public
programs.

While the study considered only one direct payment program, it is con-
ceivable that similar analyses can be applied to other federal programs. Ex-
plicit recognition must be made, however, of the potential sacrifice in strict
program efficiency that possibly may result if resource develOpment programs

are constrained in any way by distributional considerations.

 

1 . - .-. .
See Chapter V for the speCitic studies conducted by these researchers.

CllAPTER II

THE AGPICULTURAL CONSERVATION PROGRAM

The intended purposes of the Agricultural Conservation Program can be
summarized as: (l) restoration and improvement of soil fertility, (2) re-
duction of erosion caused by wind and water, and (3) protection and improve-
ment of water resources for agricultural purposes. These purposes are aimed
at the agricultural seCtor as direct beneficiary but also to the general
public through reduced flooding sedimentation loads in waterways, and the like.

This chapter describes the program under investigation.

Conservation NCGO

 

Erosion problems and their associated ramifications were found to be
substantially less on land having protective vegetative cover. This finding,
together with inferences on Splash accentuated soil erosion, provided a poten-
tial avenue to help control the land deterioration and erosion problems pre-
valent during the 1930's.1 The problem was to initiate widespread use of
available erosion control techniques. The Soil Conservation and Domestic
Allotment Act authorized the federal government to share farmers' out-of-
pocket costs for applying approved conservation practices on their land. The
government would also provide the farmer technical assistance in analyzing

the conservation practices best suited to his farm.

 

s Prentice-Hall
to stimulate soil

 

l H . __

See J.n. Stalii ngs, Sooil Conservation (Englewood Clitr
Inc., 1957), for a review of me historical setting that was
and water conservation e the U.S.

ECL'TU'IVCS

 

The program achieves the adoption of conservation practices through a
cost share incentive package. Tconomic theory would suggest that if profit
maximization were the central motivation behind a farmer's decisions, con-
servation practices would be adOpted as apprOpriate for his farm until the
marginal value product of the practice about equaled the marginal factor
cost.l (See point P on Figure 1.) If the government paid for a specified
share of practice cost, the cost per practice unit would decrease, shifting
the marginal factor cost line to a lower level. The theoretical case would
suggest that more conservation measures would be used by the farmer until the
increment of value again equals the increment of costs. In the diagram,
practice use would increase to OR from OP.

This theoretical simplification, however, should be adjusted to consider
the multiple products that can be obtained from the various conservation
practices. Interdependence with other farm resources should also be considered.
Time dimensions would yield real world insight into incentives for practice
adoption. For example, establishment of enduring vegetative cover yields the
benefit of the vegetative crop as a product, a subsequent year's increment to
a small grain crop output from any added soil improvement or fertility reten-
tion caused by the conservation practice, and reduced flooding sedimentation
in areas below the protected crepland. Costs, however, would include Opportu-
nities foregone as well as out-of-pocket outlays for the conservation practice
plus value of the farmer's labor and use of other farm resources. The real
dynamics of the program indicate that the simple economic incentive descrip-

tion is far from complete.

 

1Assuming that product and resource prices are constant.

in". I [I'll I III

 

r II: III II. II Ii

 

 

 

ity

red—
..C

a
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—

icai

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l

ineoret

ACP COSt S‘

According to Agricultural Stabilization and Conservation Service adminis-
trators, many participau ng farmers lose money in the short run.1 The returns
from conservation practices are not usually visible within the first two or
three years. Many praCtices are heavily oriented towards long-run returns--such
as those labeled as having permanent and enduring benefits. Increased farmer
financial risks sometimes are also involved in practice adoption.2 These
problems, coupled with the economic and physical constraints facing the various
types, sizes, and classes of farms may well pose an implied barrier to wide-

spread distribution of program benefits.

Program.Mechanics

The program is developed and administered at the local level. County
committees, composed of resident farmers, formulate plans under the technical
guidance of state ASCS groups involved in ACP.3 Plans are then submitted to
state offices and subsequently to federal authorities for review. ASCS then
formulates a national program and submits this for congressional review and
authorization. Finally state and local groups develOp their programs within
the structure of the national program. The county committees are responsible
for field administration of the program.

Through this system of operations, national and state specialists in ACP
have little control over the farms or farmers likely to receive cost share
assistance. Local committees have the final decision. Little, if any consi—

deration is explicitly made for farm size during the approval process.

 

lU.S., Congress, House Subcom 1itte e oft the Committee on Appropriations,
Hearings, Department of Agr' ation.'; for 1967, 89th Cong., 2d Sess.,
1966, pp. 295—298. Cited he eafter a House Subcommittee of the Committee on
ApprOpriations, USDA Hearings f r 6

2lbid., 295.

..
1f - -;-r\ A“ “A 54...
LL. :.'J,JL\J.)L.L

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bx.

# —.Am
r
n

O

3 . . . . . . .
The formald deSienation is the Agricultural Stabilization and Conserva-
tion county commit tee e.

Fund Disbursements

 

Program funds are distributed among states generally in accordance with
their conservation needs, except for a minimum allotment formula built into
the authorizing legislation. Funds are then distributed among counties by
state administrators--presumably based on needs measured by the composition
and extent of county committee requests. The local committees then disburse
funds to participants based on the specific practice and the relevant cost
share rate. The rate generally averages 50 per cent of out-of-pocket costs
although allowances can reach 80 per cent in some states and counties. The
local committee determines the specific rate applicable to each participating

farm.

Trends in Program Assistance

 

The fast acceptance of ACP concepts and approved practices is discernable
from the long-term trends in program dollar assistance. During the first year
of operation, 1936, more than $60 million was spent to finance part of the
costs of conservation practice adoption. More than twice that amount was spent
five years later--during 1941. The total amount of assistance has leveled since
the close of World War II. Table 1 presents a summary of major program indica-
tors since l936 by five-year averages.

The number of participating farms reached its peak during the war years.
The general downward trend is indicative of either a decline of farmer interest,
the achievement of some of the conservation objectives of the program, or the
long-run exodus of farmers from agriculture. A mathematical truism of the
faster rate of decrease in participating farms than in total assistance is the
increased payments per farm. This ratio increased at 8.8 per cent annually

over the quarter century period.

12

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13

Cropland on participatin farms serves as another measure of program

(It;

trends. Over the long run, the gross magnitude has declined, but this says
nothing of the acreage treated under the program during each of the relevant

years.

Program Practices

 

What are the specific practices that are approved for cost share assis-
tance? -They are mostly intended to control soil erosion or permit conservation
of water. During 1964, the practice that had the largest single share of
program expenditures was application of liming material to permit land use for
soil conserving crops. The second largest practice was the establishment of
permanent cover for erosion control or land use adjustment. The third ranking
practice was the provision of interim cover and green manure. All approved
conservation practices for 1964 are specified in Table 2.

The general groupings of practices were used as summary measures to
determine the most important practices for each state. The percentage of
total state ACP assistance in each group was computed (see Table 3).

The establishment of permanent cover would appear to be the most impor-
tant measure for Northeastern and several North Central States. Also the Ozark
States would appear to require permanent cover crOps for erosion control. All
of these areas had more than half of state payments devoted to this group of
practices.

The Western States have only small percentages of total practice funds
devoted to crop cover. In contrast, water conservation and water management
practices are considered most important--with more than half of practice monies
funneled into this group, classed as C type practices.

It would appear that the ACP program should be reaching a wide cross

section of farms facing conservation problems. The legislation and economic

REGULAR ACP CONSERVATION PRACTICES

I. CONSERVATION PRACTICES WITH ENDURING BENEFITS

Measures Primarily for Establishment of Permanent Cover (A-type)
Permanent cover for erosion control or needed land-use adjustment
Additional acreages of enduring cover in crop rotations to retard erosion
Liming materials to permit the use of conserving crops
Rock or colloidal phosphate to permit the use of conserving crops
Gypsum or sulphur to permit the use of conserving crops
Contour stripcropping to protect the soil from water erosion
Field stripcropping to protect the soil from wind erosion
Trees or shrubs planted for forestry purposes
Trees or shrubs planted to prevent wind or water erosion
Tillage of trees or shrubs planted prior to 1964
Fencing planted areas of trees or shrubs for forestry or erosion control
Removal of stonewalls or hedgerows to permit installation of conserva-
tion measures

 

Measures Primarily for Improvement or Protection of Cover (B-type)
Improvement of established cover for soil or watershed protection
Fireguards on rangeland
Rangeland improvement by deferred grazing to permit natural reseeding
Control of competitive plants on range or pasture
Tillage Operations on pasture or rangeland
Wells for livestock water to improve grassland management
Springs or seeps for livestock water to improve grassland management
Livestock water reservoirs to improve grassland management
Pipelines for livestock water to improve grassland management
Artificial watersheds to accumulate runoff for livestock water
Fences to protect established cover
Tanks or troughs for storage of livestock water
Timber stand improvement
Firelanes or firebreaks to protect woodlands
Dams or ponds for forest fire control
Stocktrails through natural barriers to improve grassland management

 

Measures Primarily for the Conservation or Disposal of Water (C-type)
Sod waterways to dispose of excess runoff and to control erosion
Permanent cover to control erosion in gullies and other critical areas
Terraces to control erosion or conserve moisture
Removal of inadequate terraces
Diversion terraces or ditches to control erosion
Storage-type dams for erosion control
Nonstorage-type dam", checks and drops for erosion control
Structural protection of outlets or inlets to control erosion
Protection of streambanks or shores to control erosion or to prevent

flooding

 

II.

15

TABLE 2--Continued

Drainage of farmland normally devoted to crops to permit conservation
farming

Spreading spoil banks along drainage ditches constructed prior to 1964

Reorganization of irrigation systems to control erosion and conserve
water

Reorganization of irrigation systems (pooling agreements only)

Leveling irrigable land to control erosion and conserve irrigation‘Jater

Reservoirs for irrigation water

Lining irrigation ditches to control erosion and conserve water

Structures in lined irrigation ditches

Spreader terraces or ditches to permit beneficial use of runoff

Regular subsoiling to improve water penetration and control erosion

Measures Primarily to Benefit Wildlife (G-type)

 

Permanent cover for wildlife feed or habitat

Annual cover for wildlife feed or habitat

Planting trees or shrubs for wildlife feed or habitat
Development of shallow water areas for wildlife habitat
Level ditching for wildlife habitat

Shallow pits to improve wildlife habitat or feed

Ponds for wildlife

CONSERVATION PRACTICES WITH BENEFITS OF LIMITED DURATION

Interim Cover and Green Manure Crops for Erosion Control and Land-Use
Adjustment (D-type)

 

Measures Primarily for Temporarngrotection from Erosion (E-type)
Stubble mulching to control erosion and improve permeability
Contour fanning to control erosion
Emergency tillage to control erosion and conserve moisture
Surfacing clod-forming subsoil to control erosion and conserve moisture
Weed control as a step in controlling erosion

Mulching orchards, vineyards, crOpland or eroded pastures

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18

mechanisms of the program do not lend any significant hint of special concern
with specific sizes of farms, although it would appear that some of the
practices are oriented towards interests of the various regions. This latter
feature is in response to the wide difference in conservation needs as the

regions differ in resource attributes and other localized characteristics.

CHAPTER III
APPROACH AND METHODOLOGY

Distributional analysis involves the investigation of the ”spread” of
the item studied over the relevant body of recipients. In some cases the
recipients might be geographical regions--such as states or counties.1 Fre-
quently, the item studied is some variation of the income concept. The re-
cipients have been workers in occupational classes, families, landowners,
etc. Studies of this type have shed light on the existing distributions and
their trends for measures of economic power, attainment, or concentration.
The concepts have more recently been applied to public programs that are in-
tended specifically to bring about some shift in the existing distribution of

economic rewards or economic resources.

 

1The geographical spread of federal research and development (R & D)
monies is an interesting example. See the report to the Subcommittee on Science,
Research and DeveIOpment of the Committee on Science and Astronautics for a
detailed description of the geographical distribution of R & D spending. U.S.,
Congress, House, Subcommittee of the Committee on Science and Astronautics,
Obligations for Research and Development, and R 8 D Plant, by Geographic Divi-
sions and States2 by Selected Federal Agencies, Fiscal Years 1961-1964, 88th
Cong., 2d Sess., 1964. The distribution of population has also carried im-
portant political implications.

2Herman P. Miller has described the 1959 distribution of family income
with respect to most of the major economic factors that are directly related
to income, including, for example, education, occupation, industry of employment,
and socio-economic characteristics of families. U.S. Bureau of the
Census, Income Distribution in the United States, by Herman P. Miller, a 1960
Census Monograph (Washington: U.S. Government Printing Office, 1966).

3Richard Caves, American Industry: Structure, ConductL Performance
(Englewood Cliffs: Prentice-Hall Inc., 1964), p. 8.

 

 

l9

20

The distributional analysis of the ACP payment stream treated farms as
the unit over which payments are spread. Alternative factors might include
farmers, farm operators, farm families, acres of farmland, or farmland ex-
hibiting a need for conservation practices. The farm, however, is the basic
unit which is considered from the government's perspective when application
is made for cost share assistance. For example, in the event of multiple
ownership of a farm, such as a partnership, all owners are considered as 233
person for ACP purposes. In the case of one person owning separate farms,
separate ACP payments can be obtained. Due to the program concentration on
farms as the recipient unit, cost share payments were analyzed with respect

to farms.

Selection of Measures

 

In this study the principal concern was how ACP cost share payments are
distributed among farms ranked by size. Although the program is intended as
a means of combating resource depletion and deterioration problems, an income
redistribution purpose for ACP has been hypothesized.1 If this were the case,
the distribution of payments would be expected to be skewed towards the size
range of farms that are the intended recipients.

All of the current analysis of distributional characteristics of federal
programs must be viewed as something less than fully satisfactory. Unless some
reasonably complete objective can be specified, the analysis must be limited
to describing what has been. In the case of ACP we are unable to present a

quantified objective and therefore, we cannot estimate the proportion of the

 

1K. William Easter, ”An Evaluation of the Agricultural Conservation
Program's Performance in Fulfilling Program and Political Objectives" (un-
published Ph.D. dissertation, Department of Agricultural Economics, Michigan
State University, 1966).

21

final objective that has been satisfied or achieved. In any event, the avail-
ability of data is crucial to the analysis of public programs. For this study,
data were available on the extent of ACP payments among farm size ranges.

The naval stores component of ACP and the emergency conservation measures
were not included in the study. The former is both extremely small in dollar
amount and is specialized in geographical coverage. The emergency conservation
outlays were excluded because they are available only in designated disaster
areas. Furthermore, their evaluation would be less likely to yield meaningful
results unless the disaster area were sufficiently widespread as to encompass

a large cross section of farms in various size ranges.

Measurement of Farms

 

An issue of considerable importance to this study is the lack of con-

sistency between the Census of Agriculture and data available from the Agri-

 

cultural Stabilization and Conservation Service. The problem lies in the

operational definitions. The Census of Agriculture defines farms in terms of

 

a combination of land area as a place of agricultural operations and the
estimated value of agricultural products sold. This definition, although use-
ful and effective for many purposes, does not conform to the farm program
oriented definition used by ASCS. The latter considers a farm to be a produc-
tion unit which holds a marketing quota and/or an acreage allotment under the
ASCS administered federal price support program.

The total number of farms in the U. S. amounted to 3,157,857 according
to the 1964 Census while ASCS estimated farms at 4,922,701 for the same period.

Differences such as this did not permit consideration of Census data during the

22

analysis.1 ASCS data were used throughout the study.2

For this study farm size was measured by total reported acreage of farm-
land. The size classes considered in the analysis are:

Under 100 acres

100-139 acres

140-179 acres

180-259 acres

260-499 acres

500-999 acres

1000-1999 acres

2000 acres and over.
Use of these size ranges for constructing Lorenz curves required assuming that
within each farm size group, farm numbers and payments were prOportionately

distributed.

Lorenz Curve

 

The primary analytical tools used for this study were the Lorenz curve and
the related Gini concentration ratio. These measures permit comprehensive pre-

cise description of the study results.

 

1During an initial part of the study, an attempt was made to estimate the
distribution of ACP payments over Census defined farms. To do this required the
assumption that a similar size distribution of farms existed for both ASCS and
Census definitions. It also required the assumption that a proportionate share
of gross payments accrued to Census farms in the size ranges as what existed
for ASCS data. It was concluded that composite assumptions such as these would
not be valid for the study since the ASCS data are weighted more towards small
farms compared to Census data. The earlier Census based estimates were not used
due to this limitation.

2U.S., Agricultural Stabilization and Conservation Service, Agricultural
Conservation Program, 1964 Frequency Distribution of Farms and Farmland (Wash-
ington: U.S. Government Printing Office, 1966).

 

23

In brief, the Lorenz curve is the locus of points that relates the cumu-
lative percentage of ACP payments to the associated cumulative percentage of
size ranked farms. It is descriptive of the relative share of aggregate pay-
ments that is received by each specified percentile of farms. This curve is
described in Figure 2. The diagonal represents a Lorenz curve in the case of
perfect proportionality between share of payments received by each percentile
of farms.

The Lorenz curve can generally be expected to depart somewhat from the
diagonal--but the extent is dependent on the items under investigation. In
the case of ACP, it is not possible to determine a priori the likely extent
of departure from the diagonal that would be expected. The area between the
Lorenz curve and the diagonal serves as a measure of prOportionality between
payments and farms. For example, were only a small area to exist between the
two functions, then the extent of preportionality can be concluded to be high.

Conversely, if the area is large, the proportionality is small.

The Gini Ratio

The relationships between the Lorenz curve and the diagonal can be briefly
summarized in a single statistic through use of the Gini ratio. This indicator
'measures the proportion of the total area under the diagonal that lies between
the Lorenz curve and the diagonal. Figure 2 depicts this feature. The cross
hatched area between the Lorenz curve and the diagonal represents the amount of
departure from absolute prOportionality between payments and farms. When di-
vided by the total area under the diagonal, the Gini ratio is formed. The
larger the deviation from absolute equality, the larger will be the area be-
tween the curve and the 45° line--and therefore the larger the Gini ratio.
Conversely, the smaller the deviation the smaller the area and the lower the

ratio. The Gini ratio will vary between zero and unity. For example, if the

Gini concentration ratio was .98, it would suggest that a very few farms were
receiving almost all of the ACP payments. A ratio of .02 would mean the reverse.
It should be noted that the Gini concentration ratio does not possess

any normative significance alone. Being purely descriptive, the ratio cannot

suggest that one value is preferred over another concentration value.

Procedures

 

The data on farms and payments were arrayed among the various size ranges
of farms and cross tabulated to reveal what share of aggregate payments was
received by a specified percentile of farms. Since the analysis is based on
shares, the rigid dimensions of the size ranges was a slight problem. The
data on payments within a size range were assumed to be distributed in roughly
the same preportion as farms--therefore, permitting percentile to percentile
comparisons. For example, payments received by farms in the 50-69 acre size
class were distributed to the lowest fifth and the second fifth of farms in
the same preportions as farm numbers, thus assuming that payments per farm were
constant within the specified size range.

This procedure produces a slight bias in the resulting data, but valid
alternative procedures could not be developed that materially enhanced the

usefulness of the results.

CHAPTER IV

THE DISTRIBUTION OF ACP PAYMENTS

The analysis was conducted on two levels; first on a national basis, and
secondly on a state-by-state basis. In each case, the payment distributions
were analyzed by participating farms and all farms. The all farms category
was assumed to be a measure of all potential participants in the cost share

program.

Average Payments Per Farm

 

One way to view government payments for conservation purposes would be
on an average basis. Table 4 depicts average cost share payments per partici-
pating farm for selected size ranges. Clearly, a positive relationship exists
between farm size and average payment. The overall average payment per partici-
pating farm was $190 for 1964. The average payment per participating farm for
the size group of less than 100 acres was 90 per cent lower than the overall
average. The average payment for the 2000 acres and over size group was 244
per cent more than the overall average. The same general pattern exists through-

out the possible size ranges.

Share of Payments

 

The distribution of payments is more clearly visible when shares of pay-
ments are compared to selected preportions of participating farms. Table 5
presents the share of gross ACP cost share payments received by each fifth of
participating farms arrayed by size. The lowest fifth--the smallest 20 per
cent of U. S. farms with the smallest acreage of farmland as defined by ASCS--

received only 10.5 per cent of aggregate cost share payments. The second fifth

26

AVERAGE PAYMENT PER PARTICIPATING FARM FOR SELECTED SIZE
OF FARM CATEGORIES, 1964 AGRICULTURAL CONSERVATION PROGRAMa

Size of Farm
(acres)

 

Under 100

100-139

140-179

180-259

260-499

500-999

1000-1999

2000 and over

27

TABLE 4

Average Payment Per Participating Farm

 

(dollars)
100
144
171
198
249
333
443

654

 

aU.S., Agricultural Stabilization and Conservation Service, Agricultural Conser-
vation Program, 1964 Frequency Distribution of Farms and Farmland (Washington:
U.S. Government Printing Office, 1966), p. 56.

TABLE 5

SHARE or 1964 ACP TOTAL PAYMENTS RECEIVED
BY EACH FIFTH OF SIZE RANKED FARMSa

 

 

 

Lowest Second Middle Fourth Highest
Fifth Fifth Fifth Fifth Fifth
10.5 12.3 18.1 22.5 36.6

 

3Table I in Appendix A.

28

had a Slightly larger share, 12.3 per cent. The fifth of all farms ranking
the largest in acreage received 36.6 per cent of 1964 cost share payments. In
other words, the t0p fifth had more than three and a half times the share of
direct payments than that of the lower 20 per cent of participating farms.

Converting payment share data to a cumulative basis leads to a measure
of payment concentration in addition to distribution. A relatively high con-
centration is foreshadowed by the cumulative distribution of payments among
participating farms (see Table 6). For example, the top 10 per cent of parti-
cipating farms captured 22.5 per cent of the available cost Share assistance.
This is accentuated by looking at the larger farms--those with 1,000 acres or
more. They were 4.9 per cent of ACP participants, but received 13.5 per cent
of total payments.

The Gini concentration ratio--serving as a summary index of the difference
between cumulative percentiles of payments and farms--amounted to .271. This
Gini suggests that ACP cost share assistance is more preportionally distributed
among recipient farms than are other farm programs.1

What does the distribution look like when conservation payments are com-
pared with all potential recipients? If large farms do not participate in the
program and if small farms receive sizable payments, the Gini ratio can be
expected to move closer to zero. Conversely, if smaller farms comprise a
larger share of the non-participants, the Gini ratio would become larger. If
non-participants are generally distributed over size ranges the same as parti-
cipating farms, the difference in the Gini ratio should be relatively small.

In 1964 there were 4.9 million farms defined by ASCS standards. Theore-

tically, all of these were eligible for ACP assistance if they would apply any

 

1
See Chapter V.

29

TABLE 6

LORENZ CURVE OF 1964 ACP TOTAL PAYMENTS AMONG
SIZE RANKED PARTICIPATING FARMS,
UNITED STATESa

 

 

Proportion of Farms Proportion of Payments

(Z)
Lower 10% 5.3
Lower 20% 10.5
Lower 33% 17.7
Lower 40% 22.8
Lower 50% 31.1
Higher 50% 68.9
Higher 40% 59.1
Higher 33% 52.7
Higher 20% 36.6
Higher 10% 22.5

Gini concentration ratio 0.271

 

a
Table I in Appendix A.

30

of the more than 70 different approved conservation practices.1 About 1.1
million farms--22 per cent of all farms--participated in ACP during that year.
The 1964 data reveal a greater payment concentration among large farms
when the analysis includes all potential units capable of seeking--but not
necessarily receiving--cost share assistance. The lower fifth of all farms
received 6.9 per cent of the payments while the lower half received only 17.3

per cent (see Table 7).
TABLE 7

LORENZ CURVE OF 1964 ACP TOTAL PAYMENTS AMONG
ALL SIZE RANKED FARMS, UNITED STATESa

 

 

Proportion of Farms Proportion of Payments
(‘70)
Lower 10% 3.4
Lower 20% 6.9
Lower 33% 11.4
Lower 40% 13.7
Lower 50% 17.3
Higher 50% 82.7
Higher 40% 74.5
Higher 33% 68.1
Higher 20% 51.9
Higher 10% 32.9

Gini concentration ratio .454

 

a
Table II in Appendix A.

 

J‘Realistically, however, a number of barriers may exist that limit parti-
cipation. See Chapter V.

31

I of all farms received more than half of

F"

In contrast, the upper fift
conservation program payments made during 1964. Accordingly, the Gini ratio
almost reached the middle of the zero-terone scale, about .454. This con-
centration measure is close to 70 per cent higher than when only participating

farms are included it the aralysis.

'_

One reason for the larger Gini ratio, in the case where all farms are
consider a, is that more than half of all non-participating farms are rather
small in acreage. Ap ropo mionately larger share of participating farms are

more than 180 acres in size (see Table 8).

TABLE 8

COMPARATIVE DISTRIBUTIONS 0F PARTICIPATING AND
NGN-PARTIC IPAT ING FARMS BY SIZE CLASS,
AGRICULTURAL CONSERVATION PROGRAM 19648

 

 

 

 

 

 

DISEribution Distribution of Distribution of Non-
Size Class of All Farm Participating Farms Participating Farms
(in acres) (per cent) (per cent) (per cent)
under 100 49.8 32.5 54.6
100-139 11.6 12.5 11.3
140-179 12.2 13.4 11.8
180-259 9.6 13.4 8.5
260-499 10.0 16.1 8.3
500-999 4.0 7.2 3.1
1000 and over 2.8 4.9 2.3

 

aU.S 5., Agricultural Stabilization and Conservation Service, M ricultural Con-
servation Program 1964 Frequencv Distribution of Farms and Farmland (Washing-
ton: U.S. Government Printing Office, 1966), pp. 47- 49.

 

 

 

Analvsis by States

The distribution of payments among farms is only generally revealed by
data on the national level. Closer analysis by states provides further in-
sights on farm size specific differences in payment distributions.

Lorenz curves and Gini concentration ratios were computed for each state
plus the territories of Puerto Rico and the Virgin Islands. The analysis
followed the same framework as that described for the national level.

Using the Gini ratio as a summary measure of the Lorenz curve, the
degree of concentration was found to vary substantially by state. States with
the highest concentration of payments among the larger participating farms
generally included the easrern seaboard and the southern tier of the U. S.,
from New Mexico to the Atlantic. A few scattered additional states had fairly
large Gini ratios. In contrast, states with low Gini ratios included the
North Central and the Western States.

Table 9 lists the states ranked in order of the Gini ratio estimated
from participating farms. Seven of the 10 highest states are located in the
southeastern part of the U. S. Table 10 presents the state rankings when the
Gini is computed on the basis of all farms.

The range of Gini ratios estimated for all states is summarized in
Table 11. The range of Gini ratio values is presented in the far left-hand
column using an arbitrary interval length of .050 units. The highest fre-
quency of clustering for derived ratios was around .250--and closely in line
with the national estimate of .271 when only participating farms are con-
sidered.

The same general clustering occurs when all potential farms are con-
sidered, except that the mode was .350-.399 and the weighted national

estimate was .454. This difference can be explained by the implicit equal

TABLE 9

STATE COMPARISONS OF ACP PAYMENT CONCENTRATION
RATIOS AMONG PARTICIPATING FARMSa

 

 

 

 

Rank State Gini Ratio
1 Mississippi 0.3740
2 Louisiana 0.3660
3 Alabama 0.3310
4 Florida 0.3300
5 Arkansas 0.3280
6 South Carolina 0.3260
7 Virgin Islands 0.3240
8 South Dakota 0.3110
9 Hawaii 0.2910

10 Delaware 0.2840
11 Utah 0.2830
12 Georgia 0.2770
13 Connecticut 0.2760
14 Maine 0.2710
15 Puerto Rico 0.2690
16 Texas 0.2650
17 Rhode Island 0.2620
18 Virginia 0.2620
19 North Carolina 0.2600
20 Maryland 0.2510
21 Colorado 0.2450
22 Tennessee 0.2430
23 New Jersey 0.2420
24 New Mexico 0.2380
25 Massachusetts 0.2360
26 New Hampshire 0.2270
27 Indiana 0.2170
28 Pennsylvania 0.2140
29 North Dakota 0.2130
30 West Virginia 0.2110
31 Missouri 0.2070
32 New York 0.2020
33 Michigan 0.1970
34 Illinois 0.1960
35 Vermont 0.1950
36 California 0.1890
37 Kentucky 0.1770
38 Ohio 0.1760
39 Nebraska 0.1630
40 Montana 0.1560
41 Nevada 0.1530
42 Kansas 0.1480
43 Oklahoma 0.1460

34

TABLE 9--Continued

 

 

Rank State Gini Ratio
44 Iowa 0.1450
45 Wisconsin 0.1370
46 Minnesota 0.1320
47 Idaho 0.1310
48 Oregon 0.1280
49 Wyoming 0.1170
50 Arizona 0.0970
51 Washington 0.0740
52 Alaska 0.0430

 

aTable I in Appendix A.

TABLE 10

STATE COMPARISONS OF ACP PAYMENT CONCENTRATION
RATIOS AMONG ALI FARMSa

 

 

 

Rank State Gini Ratio
1 South Carolina 0.6030
2 Alabama 0.5850
3 Delaware 0.5640
4 Florida 0.5580
5 Louisiana 0.5460
6 Georgia 0.5310
7 New Jersey 0.5200
8 Arkansas 0.5120
9 Mississippi 0.5000

10 Maryland 0.4970
11 Texas 0.4900
12 California 0.4780
13 Hawaii 0.4770
14 Missouri 0.4770
15 Indiana 0.4590
16 Illinois 0.4470
17 Virgin Islands 0.4440
18 Tennessee 0.4370
19 Michigan 0.4360
20 South Dakota 0.4360
21 Ohio 0.4290
22 Kansas 0.4270
23 New York 0.4260
24 Wisconsin 0.4260
25 Pennsylvania 0.4250
26 Massachusetts 0.4110
27 Virginia 0.4060
28 Kentucky 0.3930
29 Minnesota 0.3870
30 Oklahoma 0.3840
31 Iowa 0.3800
32 Nevada 0.3800
33 Nebraska 0.3780
34 New Hampshire 0.3780
35 North Dakota 0.3760
36 Connecticut 0.3740
37 Oregon 0.3740
38 Maine 0.3730
39 Montana 0.3680
40 Washington 0.3520
41 North Carolina 0.3410
42 Utah 0.3340

TABLE lO--Continued

36

 

 

 

 

Rank State Gini Ratio
43 New Mexico 0.3330
44 Idaho 0.3250
45 West Virginia 0.3240
46 Rhode Island 0.3020
47 Puerto Rico 0.2740
48 Vermont 0.2630
49 Colorado 0.2430
50 Alaska 0.2260
51 Whoming 0.1710
52 Arizona 0.0370

aTable II in Appendix A.

TABLE 11

SPREAD OF ACP PAYMENT CONCENTRATION TIOS AMONG STATESa

 

 

 

Participating Farms All Farms

 

 

 

Value of Gini Ratio Number Rel. Frequency Number Rel. Frequency
Less than 0.100 3 5.8 1 1.9
0.100-0.149 8 15.4 -- --
0.150-0.199 9 17.3 1 1.9
0.200-0.249 12, 23.1 2 3.8
0.250-0.299 I2D 23.1 2 3.8
0.300-0.349 6 11.5 6 11.5
0.350-0.399 2 3 8 13 25.0
O.400-0.449 -- -- 12 23.1
0.450-0.499 -- -- 6b 11.5
0.500-O.549 -- -- 5 9.6
0.550-0.599 -- -- 3 5.8
O.600-0.649 -- -- l l 9
0.650-and over -- -- -- ~-
TotalC 52 100.0 52 100.0

 

 

aTables 9 and 10.

bNational average also falls

(A.
L

, a-
. “‘\ n; ““11““ “'1‘? “n1- “”11’1l

in the specified range.

‘P‘A'h-nl A11n 'Pn wnq1nA-1'1nn

37

weighting of state results when analyzing the mode whereas the national esti-
mate is based on explicit state weights using the original data.

Clearly, cost share assistance is concentrated among larger farms in
most states. The difference in program participation for farms in specified
size ranges accounts for much of the concentration. In Table 12, for example,
the ten states ranking highest in payment concentration based on participating
farms were singled out for analysis. These states have a significantly higher
proportion of non-participants than participants in the less than 180 acres

size class. The same general pattern exists for all states.

TABLE 12
COMPARATIVE DISTRIBUTION OF PARTICIPATING AND

NON-PARTICIPATING F.RMS WITH LESS THAN 180 ACRES OF FARMLAND
FOR SELECTED ST TES--l964 AGRICULTURAL CONSERVATION PROGRAMa

 

 

Share of Farms With Less Than 180 Acres

 

 

State All Farms Participating Farms Non-Participating Farms
Mississippi 75.5 64.4 81.1
Louisiana 82.6 67.4 87.2
Alabama 82.9 61.4 86.9
Florida 76.5 56.0 82.0
Arkansas 77.0 61.1 82.0
South Carolina 84.3 61.0 88.5
Virgin Islands 91.6 79.3 93.2
South Dakota 43.1 30.8 48.8
Hawaii 88.6 71.4 89.7

Delaware 83.8 60.8 90.1

 

a
U.S., Agricultural Stabilization and Conservation SerVice, Agricultural Con-
servation Progran 1964 Frequency Distribution of Farms and Farmland (Wash-
ington: U.S. Government Printing Office, 1966), pp. 46-49.

 

 

CHAPTER V
ANALYSIS OF THE ACP PAYMENT DISTRIBUTION

Gini ratios for each of the states and the nation--augmented by the
underlying Lorenz curves--serve as a useful measure of the distribution and
concentration of conservation cost share payments. This chapter summarizes
an analysis of possible reasons and relationships behind the payment distri-

bution and the interpretation of the results.

Factors Behind Non-Participation in ACP

A number of reasons exist that might explain the low participation of
small farms in ACP--and thus the existing distribution of payments.

The soil and land use problems covered by ACP may be concentrated on
farms that are participants in the program. During appropriation hearings,
however, program administrators indicated that the 2 million farms not parti-
cipating in ACP from 1959 to 1962 probably have conservation needs relatively
greater than participating farms.l

A lack of information on available conservation benefits and financial
incentives might be another factor behind non-participation. Definite con-
clusions cannot be drawn due to a lack of data.

It is possible that some small farm Operators lack sufficient funds to
supply their share of practice costs. However, the variable rate for federal
cost shares should cover iany of these cases, provided that the farm operator

relies mainly on his farming business for his livelihood.

 

House Subcommittee of the Committee on Appropriations, USDA Hearings for
1967, p. 226.

 

38

39

It is also possible that the conservation practices that are available
to farmers are not of sufficiently high value to permit worthwhile returns
from participating in the program. This is likely to be the case for many
practices with long enduring benefits such as permanent cover.

The last possibility includes the spectrum of non-economic, social in-
hibitors to widespread program participation. In theory, there are no
barriers of this type--nothing can bar a farmer, share-cropper or landowner
from receiving federal assistance for conservation practice adOption provided
that funds are available, regulations are followed, conservation needs exist,
and the participant can raise his share of the cost. Without any evidence to
prove conclusively that these potential barriers really do exist, it can only
be hypothesized that program participation is dependent on institutional
barriers. The relatively high Gini ratio values for many of the Southern
States, however, suggests that possibly institutional barriers may discourage
small farms from seeking ACP assistance.

The full significance of these hypothesized forces behind non-participa-

tion cannot now be determined.

Penetration

 

Even though non-participation can be explained in theory, little can be
proven from the available data. We can, however, identify the regions that
tend to have the highest rates of participation in ACP over a period of time.
On this point we shift from a one year period of analysis to a five year
period. Any attempts to explain non-participation must consider dynamics
because participants in one year may or may not have been in ACP during prior
years.

Data are available on the number of farms that participated at least once

in ACP from 1959 through 1964. When this figure is expressed as a per cent of

40

all potential farms it can serve as a measure of program “penetration” or
the extent of involvement of farms in ACP. For example, North Dakota had
about 82 per cent of all ASCS defined farms participate at least once in
ACP from 1959 through 1964. The nation as a whole averaged 49.5 per cent.
California ranked the lowest among the contiguous states with only 27 per
cent of all possible farms involved at least once in ACP over the five year
period.

The highest levels of penetration were for the New England States and
states in the upper portions of the Missouri and Colorado River Valleys.
Lowest penetrations exist for the western seaboard, two of the Southeastern
States, and the Great Lakes area. More than half of the states are within
10 percentage points from the national average.

By comparing the long term participation figures to the annual data for
1959 and 1964 a clearer perception can be developed on what is happening over
time. In 1959, 18.8 per cent of all farms participated in the Agricultural
Conservation Program. Participation increased slightly to 21.9 per cent by
1964. Over the five year period, however, half of the farms in the country
had participated at least once in ACP. This gain in participation was not
achieved by higher funding levels for the program because funding had re-
mained stable during this period.1 It is also unlikely that lower cost share
spending per farm explains the larger participation because almost half of the
states actually increased the average size of payment on the average sized

2

participating farm. Instead, higher participation was probably achieved

 

lAbove, p. 12.

2Data for the nation as a whole, however, reveal a decrease of 7 per cent
in average size of payment. This information does not refute the above argu—
ment because the decrease is small compared to the large gain in program parti-
cipation. Furthermore, the state-by-state analysis did not reveal any consistent
relationship between payment size and long-term participation rates in ACP..

by rotating the available money around to different farmers from year to year
within each county. This conclusion is supported by the fact that almost all
states (46 of 52) at least doubled in the proportion of participating farms

to all farms over the five year period compared to 1959 annual data.1

Distribution Analysis

 

Proper analysis of ACP's payment distribution depends on what purpose
lies behind the program. For example, if the program were intended to en-
courage conservation practices only on small farms, the desired distribution
would be heavily skewed to the left. This would be indicative of some income
redistribution objectives for ACP in addition to conservation practice adop-
tion. Conversely, if conservation incentives were intended to be strictly
proportional to the relative frequency of all farms by size class--conservation
assistance to all, provided that some did not get more than a proportionate
share--then the desired distribution would lie roughly along the diagonal of
the box diagram described in Chapter III. Since the stated purpose of ACP
is not related to farm size, the relevant base of comparison is limited to
the distribution of conservation needs among the various farm size ranges.

Conservation needs are generally described only with respect to types
of land use and by region. No consideration is made of farm size or ownership.
Were conservation needs identified by ownership or sales characteristics, it
might be possible to develop estimates for general size ranges as rough
measures that would be compared to the ACP distribution described in this

study. Of course, even this approach would have limitations since ownership

 

1Of the six exceptions to this doubling of participation, all states but
one generally conformed to the dramatic increase in participation but at slightly
smaller rates, e.g., 88 per cent.

42

patterns are usually based on Census of Agriculture data rather than ASCS

 

defined farms. For this study it was not possible to construct a measure
of conservation needs for farms in the various size groups.

Acreage of farmland on participating farms may serve a proxy role
generally suggestive of conservation need. Although this is not strictly
correct, it may serve as a general guideline to aid the analysis.

A sharp contrast seems evident between the payment distribution among
farms and the distribution among farmland on participating farms. Participa-
ting farms that are under 100 acres in size received 17.1 per cent of gross
ACP payments. About 32.5 per cent of all farms were in this size group.
Payments were less than prOportional to the share of farms. At the same time,
however, farms in this size group had only 4.6 per cent of the farmland on all
participating farms. Payments were more than proportional to this share of
farmland.

This same contrast exists on the other end of the size spectrum. Farms
of 2000 or more acres in size received 6.7 per cent of total ACP payments.
These same farms represented only 1.9 per cent of participants, but they had
35.8 per cent of the farmland on participating farms. The proportion of pay-
ments lies between the share of farms and the share of farmland in this
specific size group. The $2,500 limitation on cost share payments to any one
farm may well contribute to this outcome.

Similar findings on payment concentration on smaller farms are indicated
by the per acre averages for cost share assistance (see Table 13). For example,
payments averaged $1.95 per acre of farmland on farms less than 100 acres.
Farms in the 180 to 259 acres size class averaged $0.93 per acre--or half the
rate for smaller farms. On a per acre of farmland basis, smaller farms have

been receiving relatively large portions of gross ACP payments. The variable

TABLE 13

AVERAGE PAYMENT PER ACRE OF FARMLAND 1N PARTICIPATING
FARMS BY SIZE OF FARM, UNITED STATES6

 

 

 

Size Class Payment per Acre
(acres) (dollars)

Under 100 1.95
100-139 1.24
140-179 1.10
180-259 .93
260-499 .71
500-999 .48
1000-1999 .31
2000 and over .10

a

U.S.,Agricultural Stabilization and Conservation Ser-
vice, Agricultural Conservation Program 1964 Frequency

Distribution of rarms and Farmland (Washington: U.S.
Government Printing Office, 1966), p. 57.

 

 

rates for cost shares account for part of this concentration. Table 14 pre-
sents payments per acre of farmland by states.

Table 15 presents the proportion of payments concentrated among selected
proportions of farmland on participating farms. The table is similar to the
Lorenz curve presented as Table 6 in Chapter IV except acres of farmland have
been substituted for number of farms. In this case the upper fifth of farm-
land--land on the largest farms--had only 3.8 per cent of assistance payments.
The lower fifth had 48.3 per cent--almost half of total payments. The Gini
concentration ratio of .458 indicates that payments are concentrated on the
farmland that comprises many of the smaller participating farms throughout
the country.

These data reveal a skewed distribution of ACP payments towards smaller

farms--a startling contrast to the data presented in Chapter IV where it was

44

 

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00:0000mm--0fi mamas

LORENZ CURVE OF 1964 ACP T TAL PAYMENTS AMONG ACREAGES
OF FARMUND 0N SIZE RANKED PARTICIPATING FARMS
FARMS IN .LHE UNITED STATESa

 

 

PrOportion of Farmland Prgportion of Payments
Lower 10% 29.3
Lower 20% 48.3
Lower 30% 62.8
Lower 40% 75.4
Lower 50% 84,4
Higher 50% 15.6
Higher 40% 9.2
Higher 30% 5.7
Higher 20% 3.8
Higher 10% 1.9

Gini concentration ratio 0.458

aComputed from: U.S., Agricultural Stabilization and Conservation Service,
Agricultural Conservation Program, 1964 Frequency Distribution Of Farms and
Farmland (Washington: U.S. Government Printing Office, 1966), pp. 8, 10.

47

demonstrated that ACP payments tended to go to larger farming units in greater
proportion than what farm numbers alone would suggest. The data presented
here can be explained in a number Of ways. First, conservation needs might

be concentrated on the smaller farms throughout the country, thus the prOpor-
tion of payments going to smaller farms might reasonably be expected to ex-
ceed that implied by quantities of farmland alone. Secondly, the ACP program
might be one mechanism for attempting to redistribute income towards smaller
farmers. A third possible explanation represents a more likely interpretation
of these contrasting relationships between payments and farm size. The
Agricultural Conservation Program may serve as an instrument to provide at
least some agricultural subsidy to everyone with a farm, thus building a large
constituency in support Of agricultural payment programs in general as well

as ACP specifically. If this interpretation is correct, then the distribution
Of farmland would not be very important to program decisions; it would simply
be a by-product that would result after certain program decisions had been
implemented.

To explore this point further we need to lOOk at payments, farms, and
farmland simultaneously by farm size groups, realizing that farmland acts only
as a loose proxy for conservation needs. Figure 3 graphically depicts the
interrelationships Of these four variables.

The diagram is composed of four separate but interrelated curves. The
top half contains a graphic presentation of the Lorenz curves Of payments re-
lated to participating farms (on the right) and acres of farmland on partici-
pating farms (on the left). Since payments are distributed more than propor-
tionately to farmland, the Lorenz curve on the left rises above the diagonal.
The inverse is shown on the right for payments distributed among participating

farms.

48

 

 

 

 

 

 

 

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._ 50
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20
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PERCENT OF FARMLAND ON «00 PERCENT OF
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<|4° FARMS
f3 <I80
a:
g <200
% «:00
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(I)
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FIGURE 3

The Relationship Of Payments, Numbers of Farms,

Farmland and Farm Size

The bottom half of the diagram relates the specified shares of farms
and farmland to the apprOpriate size group. For example, farms with less than
100 acres comprise abtut a third of ACP participants, but they have less than
5 per cent of the total farmland on all participating farms.

A major policy implication can be inferred from.this diagram. The
information presented here suggests that ACP has been used as a mechanism.for
providing an agricultural subsidy for the largest possible number of farmers.
In other words, ACP provides a subsidy on a per farm basis rather than on a
per unit Of output or per acre of land as many of the other agricultural pro-
grams tend to do. This seems to happen even though the actual monies are

expended for applying a conservation practice to a farmer's land.

Program Comparisons

 

To explore the possibility that ACP is being used as a means to generate
farmer support of agricultural payment programs in general, an alternative
evaluation was undertaken. The ACP payment distribution was compared to the
distribution of money income received by farmer and farm-manager families and
to selected ASCS crop program payments. Since these alternatives reflect
financial position and income transfers rather than conservation needs, they
cannot be viewed as useful measures for developing conservation policy in-
ferences. They do, however, provide general indications of the relationship
between ACP benefit distributions and the existing distribution of income flows
and certain commodity program payments.

Boyne has estimated the distribution of total money income among farmers

l

and farm manager families. The fifth of these families with the highest

 

1David H. Boyne, "Changes in the Income Distribution in Agriculture,"
Journal of Farm Economics, Vol. XLVII, NO. 5, (December, 1965), pp. 1213-
1224.

 

50

incomes received about half of aggregate money income during 1963. In com-
parison, the top fifth of farms when ranked by size, received 51.9 per cent
of gross cost share payments. The closeness of the measures would suggest

that payments on the upper end of the size scale of farms is generally pro-
portional to money income distribution.

Several income and price support programs directed by ASCS were analyzed
by Bonnen.l The programs having the closest relationship to ACP are generally
the diversion components of the wheat and feed grain programs. Both of these
programs demonstrate generally greater shares of benefits accruing to reci-
pients at the larger end of the size scale compared to ACP. For example, the
top 5 per cent of the farms in the wheat program received 27.9 per cent of the
aggregate diversion payments and this same fraction of farms received 20.7
per cent of the feed grain diversion payments. Since the data are based on
allotment farms, the ACP measure with the greatest comparability would be
participating farms. The top 5 per cent of size ranked farms participating
in ACP received only 13.8 per cent of aggregate payments--a share only half
the size of the wheat diversion program (see Table 16).

Significant, also, is the extent of payment concentration in the other
programs analyzed by Bonnen. The diversion payments component of the feed
grains program referred to above had the lowest Gini concentration ratio of
all those included in Bonnen's study. Examples of the other programs are:
rice (.632), wheat price supports (.566), feed grain price supports (.588),

and cotton (.653).2

 

1James T. Bonnen, ”The Distribution Of Benefits From Selected U.S. Farm
Programs," Rural Poverty in the United States, A Report by the President's
National Advisory Commission on Rural Poverty (Washington: U.S. Government
Printing Office, 1968), pp. 461-505. -

 

2Ibid., p. 505.

51

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52

This program comparison suggests that ACP cost share payments are dis-
tributed much more prOportionately among participants than any of these
alternative programs. These data strongly suggest that certain steps are
being taken to have a widespread farmer constituency that can share in the

ACP assistance program.

Concluding Remarks

 

More than all other programs administered by ASCS, the Agricultural
Conservation Program has the widest possible involvement of farms, small as
well as large. Total participation or even proportional participation has
not been the case, but ACP has been one source Of federal assistance where
payments have accrued to farmers more because of existence of the farm as an
entity rather than because of the gross acreage under the farmers' control.
Farms with less than 180 acres, for example, received 38.6 per cent of ACP
payments even though less than 15 per cent of all farmland was under the
control of these smaller farms.

The larger than proportionate share of cost share payments going to
farms with the fifth of farmland lying on the lowest end of the size scale is
suggestive Of the broad distribution of payments. Factors contributing to
this interpretation include:

a) the higher rates of cost share assistance for farms that cannot
raise sufficient funds to pay the normal fifty per cent of costs;

b) the $2,500 limitation on total payments to any one person, thus, in
effect, permitting more money to be available for farms with less than the
massive acreages that otherwise tend to be associated with farms with large

payments; and

53

c) the ACP cost shares appear to be the only ASCS program that distri-
butes monies based more on land resource problems (conservation needs) rather

than on high soil productivity and large acreages as would seem to be the

1

case for other programs.

 

1An excellent analysis of the distribution of benefits from selected farm
programs and the relationship to land farmed is provided by James T. Bonnen in
his paper "The Absence of Knowledge of Distributional Impacts: An Obstacle to
Effective Public Program Analysis and Decisions,” Joint Economic Committee,
The Analysis and Evaluation of Public Expenditures: The PPB System, Vol. I,
9lst Cong., lst Sess., pp. 419-449.

APPENDIX

33

 

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59

BIBLIOGRAPHY

Public Documents

 

Congressional Documents

Congress, Joint Economic Committee. "The Absence of Knowledge of
Distributional Impacts: An Obstacle to Effective Public Program
Analysis," by James T. Bonnen. The Analysis and Evaluation of
Public Expenditures: The PPB System, Vol. I. 9lst Cong., lst
Sess., 1969.

Congress, House, Subcommittee of the Committee on Appropriations.
Hearings, Department of Agriculture Appropriations for 1967.
89th Cong., 2d Sess., 1966.

Congress, House, Subcommittee of the Committee in Appropriations.
Hearings, Department of Agriculture Appropriations for 1970.
9lst Cong., lst Sess., 1969.

. Congress, House, Subcommittee of the Committee on Science and

Astronautics. Obligations for Research and Development, and

R & D Plant, by Geographic Divisions and States, by Selected
Federal Agencies,iFiscal Years 1961-1964. 88th Cong., 2d Sess.,
1964.

Executive Department Documents

Department of Agriculture, Agricultural Stabilization and Conservation
Service. Agricultural Conservation Handbook: Michigan. December,
1966.

Department of Agriculture, Agricultural Stabilization and Conservation
Service. Agricultural Conservation Program.l964 Frequency Distribution
of Farms and Farmland. Washington: U.S. Government Printing Office,
1966.

 

Department of Agriculture, Agricultural Stabilization and Conservation
Service. Agricultural Conservation Program.Summary by States, 1964.
Washington: U.S. Government Printing Office, 1965.

Department of Agriculture. Agricultural Statistics. Washington: U.S.
Government Printing Office, 1954.

 

Department of Agriculture. Agricultural Statistics. Washington: U.S.
Government Printing Office, 1956.

 

Department of Agriculture. Agricultural Statistics. Washington: U.S.
Government Printing Office, 1959.

60

U.S. Department of Agriculture. Agricultural Statistics. Washington: U.S.
Government Printing Office, 1960.

 

U.S. Department of Agriculture. Agricultural Statistics. Washington: U.S.
Government Prlnting Office, 1962.

U.S. Department of Agriculture. Agricultural Statistics. Washington: U.S.
Government Printing Office, 1964.

 

U.S. Department of Agriculture. Agricultural Statistics. Washington: U.S.
Government Printing Office, 1965.

 

U.S. Department of Agriculture. Agricultural Statistics. Washington: U.S.
Government Printing Office, 1967.

 

U.S. Department of Commerce, Bureau of the Census. Income Distribution in
the United States by Herman P. Miller. (A 1960 Census Monograph).
Washington: U.S. Government Printing Office, 1966.

 

 

U.S. Department of Commerce, Bureau of the Census. U.S. Census of Agriculture:
1964, Vol. I, Counties. Washington: U.S. Government Printing Office,
1967.

U.S., The President's National Advisory Commission on Rural Poverty. ”The
Distribution of Benefits From Selected U.S. Farm.Programs," by
James T. Bonnen. Rural Poverty in the United States, A Report by
the President's National Advisory Commission on Rural Poverty.
Washington: U.S. Government Printing Office, 1968.

 

23952

Caves, Richard. American Industry: Structure, Conductererformance. Engle-
wood Cliffs: Prentice Hall Inc., 1964.

Ciriacy-Wantrup, S.V. Resource Conservation: Economics and Policies. Berkeley
and Los Angeles: University of California Press, 1952.

 

Held, R. Burnell, and Clawson, Marion. Soil Conservation in Perspective.
Published for Resources for the Future, Inc. Baltimore: The Johns
Hepkins Press, 1965.

Morgan, Robert J. Governing Soil Conservation: Thirty Years of the New De-
centralization. Published for Resources for the Future, Inc. Baltimore:
The Johns Hopkins Press, 1965.

 

Stallings, J.H. Soil Conservation. Englewood Cliffs: Prentice Hall Inc., 1957.

 

61

Articles

Boyne, David H. ”Changes in the Income Distribution in Agriculture,"

Journal of Farm Economics, Vol. XLVII, No. 5 (December, 1965),
1213-1224. (Paper read before the Annual Meeting of the American
Farm Economics Association, at Stillwater, Oklahoma, August, 1965.

 

Easter, K. William. "Changing the ACP Investment,” Land Economics, Vol.

XLV, No. 2 (May, 1969), 218-227.

Back, W.B., and Jansma, J. Dean. ”Some Distributional Effects of Public

Investments to Develop Farmland," in Incidence of Benefits and

Costs of Selected Public Programs Affecting Agriculture. (Agricultural
Experiment Station Bulletin 576). Blacksburg: Virginia Polytechnic
Institute, September 1966, pp. 11-30.

 

Reports

Cotner, Melvin T. The Impact of the Agricultural Conservation Program.in

Selected Farm Policy Problem Areas. (Agricultural Economics Number
943). East Lansing: Department of Agricultural Economics, March
1964.

 

Unpublished Material

 

Easter, K. William. "An Evaluation of the Agricultural Conservation Program's

Performance in Fulfilling Program and Political Objectives." Unpub-
lished Ph.D. dissertation, DeparUment of Agricultural Economics,
Michigan State University, 1966.