An Analysis of the Effects of Direct Rice Income Compensation Payment Program on Farm Income by Farm Typology

Lim, Cheong-Ryong; Jeong, Ho-Jung; Lim, Sung-Soo; Chung, Wingyan

doi:10.30805/kjamp.2018.45.3.567

Cited by 2 publications

(5 citation statements)

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“…To our knowledge, only Lim et al (2018) analyse the effects of direct payments on income variability for an Asian country. Lim et al (2018) simply compare the CV of total farm income (the sum of market income and direct payments) and market income and show that the effects of the fixed-rate payments and price-contingent payments on income variability differ by groups of farms. Further, Knapp and Loughrey (2017) and Lim et al(2018) disaggregate the effects of different types of payments.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Lim et al (2018) simply compare the CV of total farm income (the sum of market income and direct payments) and market income and show that the effects of the fixed-rate payments and price-contingent payments on income variability differ by groups of farms. Further, Knapp and Loughrey (2017) and Lim et al(2018) disaggregate the effects of different types of payments. Using regression analysis, Knapp and Loughrey (2017) show that decoupled payments increase income risks.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Although market price support measures generally reduce domestic price variability (OECD, 2009), many developed countries have been reforming their agricultural policies and replacing price supports with direct payments, with the long-run aim of reducing support and trade distortions (OECD, 2000). 1 Many studies have explored how direct payments impact income variability (Bojnec & Fertő, 2018Casta ñeda-Vera & Garrido, 2017;El Benni et al, 2012;Enjolras et al, 2014;Knapp & Loughrey, 2017;Lim et al, 2018;Severini et al, 2016aSeverini et al, , 2017. Many of these studies find that direct payments stabilise farm income.…”

Section: Introductionmentioning

confidence: 99%

“…Compared with many of the previous studies, one of the novelties of this paper is that it disaggregates the effects of payments using regression analysis. To our knowledge, only Knapp and Loughrey (2017) and Lim et al (2018) disaggregate the effects of different types of payments.…”

Section: Introductionmentioning

confidence: 99%

“…Second, most existing studies have been conducted in relation to the European Union (EU) countries or the United States, with the exception of Lim et al (2018) for South Korea in Asia. The rice sector, which is the focus of this paper, has been subject to a number of policy interventions in other Asian countries, not just Japan, because of its strategic and political importance.…”

Section: Introductionmentioning

confidence: 99%

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Effects of direct payments on rice income variability in Japan*

Nitta¹,

Yamamoto²,

Severini³

et al. 2021

Aus J Agri & Res Econ

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The effects of direct payments on rice income variability in Japan are analysed based on a balanced panel dataset of Japanese rice farms for 2012-2016. Firstly, the contribution of income components to rice income variability and the effects of a direct payment reduction are discussed by applying variance decomposition. Secondly, robust regression techniques are used to measure the correlation between direct payments and rice income variability. The originality of this paper is that it disaggregates the effects of payments using a regression analysis of the effects of direct payments on income variability for Japan. This contrasts with the existing literature on this topic, which has largely focused on European Union countries. This paper discusses to what degree the reduction in direct payments increases income variability. The results reveal that direct payments decrease Japanese rice income variability. Indeed, after controlling for various farm characteristics, we find a negative relationship between the amount of direct payments linked to rice production and rice income variability. Finally, the results suggest that reducing direct payments when the rice price is falling would increase rice income variability.

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