Where does all the money go? Measuring effects of agricultural policy transfers on farm income: Discussion

David Abler discusses the determination of impact of agricultural policy transfers on farm income. One indicator of the cost effectiveness of an agricultural support program is income transfer efficiency. The gain in income by farmers or other program beneficiaries divided by the cost of the program to taxpayers and/or consumers. As an indicator of cost-effectiveness, the concept of transfer efficiency does not ask whether transferring income to farmers is desirable. Its usefulness lies in asking whether a particular policy can transfer income at the lowest cost out of the many policy options available. One suggestion for future research is to empirically examine whether these factors can explain differences in agricultural research spending across commodities. One statistic is that large family farms represented 8% of all farms in 2005 but received 58% of commodity program payments going to farms.