TeachMeFinance.com - explain Incentive payments
Incentive payments The term 'Incentive payments ' as it applies to the area of agriculture can be defined as ' Direct payments made to producers of wool and mohair, which were similar to deficiency payments made to producers of grains and cotton. The incentive payment rate was the percentage needed to bring the national average return to producers (the market price plus the incentive payment) up to the annually set national support price. Each producerís direct payment was the payment rate times the market receipts. Producers with higher market receipts got larger support payments. This created an incentive to increase output and to improve quality. The wool and mohair commodity programs ended after the 1995 marketing year as required by P.L. 103-130'.
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