This study examines the economic effects of production control for the rice industry where direct payments program is currently in place. Acreage control and production diversification are considered as alternative programs to cut rice production. The results show that production control in the rice market cannot increase producer price significantly under the direct payment program although market price is substantially increased, implying that its effect on producer income is not so large. Particularly, there exists high possibility that production diversification will cause significant income loss to the existing producers of the commodities diversified from rice production. An interesting result is that net welfare can be improved upon by introducing production control program such as acreage control under the existing direct payments program. The result also shows that acreage control is better than production diversification in terms of efficiency and producer income as well.