The Empirical Distribution of the Costs of Revenue-Based Commodity Support Programs—Estimates and Policy Implications

This paper demonstrates how the density function of the U.S. domestic commodity support payments for corn differs between current price-based approaches to support and a revenue-based alternative. Comparing across program scenarios that provide equal expected levels of support at the national level, the revenue-based scenario exhibits a lower variability around total expected annual payments, and perhaps more importantly, a lower probability of high payments than the current-style support. Furthermore, for the vast majority of corn-producing counties in the United States, the coefficient of variation of total gross revenue per acre is lower under the revenue-based support scenario than under the current-style scenario.