Buying Time: The Effect of Market Facilitation Program Payments on the Supply of Grain Storage

We estimate the impact that the Market Facilitation Program (MFP) payments had on farmers' willingness to store grain. Using a fixed effects model across multiple dimensions and state-level data on MFP, grain stocks, production, and export dependence, we address the role of the decrease in opportunity costs causing an increase in the willingness to store of farmers. Our analysis finds that MFP payments had a significant impact on grain storage by US farmers. In states with relatively higher payments at the marginal 10% increase in payments a 1.28% increase in on-farm inventories will occur holding all else constant. This explains that policies that increase access to financial capital can cause small increases to grain inventories.