This study investigates the impact of ad hoc government payments—specifically the Market Facilitation Program (MFP) and Coronavirus Food Assistance Program (CFAP)—and Farm Bill safety net payments—Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC)—on non-real estate agricultural loan delinquencies in the United States. The goal is to evaluate the relative effectiveness of these payments in alleviating financial stress in the agricultural sector.
We use a state-level panel dataset covering the years 2015–2022 and apply linear fixed effects models to estimate the marginal effect of each payment type on total non-real estate farm debt and delinquency rates. Robustness is assessed using dynamic panel models and Lewbel's IV estimator to address potential endogeneity.
ARC and CFAP payments are significantly associated with reductions in short-term loan delinquencies (30–89 days past due). ARC payments also increase total operating debt, suggesting improved liquidity. PLC payments reduce longer-term delinquencies (90+ days past due), while MFP payments increase total debt but do not reduce delinquencies, indicating weaker effectiveness.
This is the first study to jointly evaluate the effects of ARC, PLC, MFP, and CFAP payments on non-real estate farm debt outcomes using actual payment timing and amounts. It offers novel empirical insights into the financial efficacy of government support programs in agriculture.
