How different types of government payments and the elimination of direct payments affect farm productivity? Evidence from Kansas crop farms

The relationship between total factor productivity (TFP) and different types of government payments is examined using data on Kansas crop farms over the period 2009–2018. Special attention given to effect from elimination direct in 2014 Farm Bill. Farm-level TFP estimated a variation traditional proxy variable approach, assuming evolution not exogenous, but can be influenced by payments. Results show that alternative affect differently. Direct were found have positive TFP, whereas risk management payments, which replaced starting 2015, did significantly. Regarding other only conservation reserve program state (positively and) significantly, was significantly lower than further restricting entirely exogenous understates actual sample an average 8%, implying matter impact farm productivity.