Yield Reserve Program Costs in the Virginia Coastal Plain

• Published in: Agricultural and Resource Economics Review Vol. 36; no. 2; pp. 197 - 212
• Main Authors: Metcalfe, Todd, Bosch, Darrell J, Pease, James W, Alley, Mark M, Phillips, Steve B
• Format: Journal Article
• Language: English
• Published: 01.10.2007
• Edition: 1203
• Subjects: Agricultural and Food Policy; compliance cost; Crop Production/Industries; nitrogen fertilizer; nonpoint source pollution; policy; yield response function
• DOI: 10.22004/ag.econ.44697

A proposed Yield Reserve Program designed to compensate farmers for any reduced yields resulting from nitrogen (N) application rates reduced to below recommended rates is evaluated. Assuming that farmers currently follow Extension recommendations for applying N, Yield Reserve Program participation reduces expected net revenue by $10 to $13/ha. The Yield Reserve Program reduces expected net revenue by $17 to $20/ha for farmers who apply N to maximize expected net revenue. Farmers’ costs of participation increase with lower probabilities of inadequate rainfall and higher corn prices and decline with higher N prices. The Yield Reserve Program can significantly reduce N applications to cropland, which may reduce N content of surface waters, but the costs to taxpayers and farmers will depend on how the program is implemented.