Market and Welfare Effects of Livestock Feed Subsidies in Southeastern New Mexico

Abstract

Input subsidies have the potential to increase production, promote more input use, and impact the environment. Unlike many other federal agricultural subsidies, livestock feed programs have not been the subject of previous economic research. During 1992-96, the U.S. Department of Agriculture paid livestock producers an annual average of $73.2 million in feed subsidies. The objective of this research is to estimate the market and welfare effects of feed subsidies in one region of New Mexico. The price and output effects of the subsidy are found to be small, and the welfare impacts of the subsidy unevenly distributed between subsidized and nonsubsidized producers.

Keywords

• emergency feed program
• input subsidy
• welfare