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Abstract

To examine the extent to which the Conservation Reserve Program (CRP) brings about a reduction in surplus commodity production, I develop a simple model that incorporates the farm-level production effects of entry into the Reserve. The model is used to estimate the reduction in aggregate program crop acreage under two CRP program alternatives: (1) the "base bite," which requires a proportional reduction in a farm's commodity base as a condition of CRP entry (the current law) and (2) no base bite, which for supply control purposes would rely upon a "displacement" of acreage actually available for planting. Data from the first four rounds of CRP bidding permit comparison of the supply control impacts of the alternative provisions. The base bite is shown to have reduced aggregate program crop plantings by 8.7 million acres, while displacement would have reduced plantings by 8.0 million acres.

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