DECOUPLED PAYMENTS IN A CHANGING POLICY SETTING

The studies in this report analyze the effects of decoupled payments in the Federal Agriculture Improvement and Reform (FAIR) Act on recipient households, and assess land, labor, risk management, and capital market conditions that can lead to links between decoupled payments and production choices. Each study contributes a different perspective to understanding the response of U.S. farm households and production to decoupled income transfers. Some use new microdata on farm households collected through USDA's Agricultural Resource Management Survey (ARMS), initiated in 1996, and its predecessor survey. These data are used to compare household and producer behavior and outcomes before and after the FAIR Act. Other studies use applied or conceptual models to characterize the impact of introducing decoupled payments. Collectively, the chapters represent an early stage in the empirical analysis of decoupled payments. The studies address many aspects of the payments' household impacts but remaining issues call for additional analysis. As the analytical paradigm changes with the evolution of farm programs, the development of appropriate data and models will improve our understanding of farm program impacts on the behavior and well-being of U.S. farm households, and the agricultural sector.Agricultural and Food Policy,

Would More Rural Bank Access to Nonlocal Funds Provide Public Benefits?

Restructuring of U.S. banking markets has raised concerns that insufficient access to loanable funds will limit economic growth in some rural areas. Access to nonlocal funds can provide public benefits through enhanced competition and efficiency, but subsidized access to nonlocal funds can create economic distortions. Because most rural areas are served by few lenders, public benefits may be limited if additional access does not encourage new competition. Unsubsidized market mechanisms could address the liquidity, risk management, and competitive challenges that some small rural banks may face. At the same time, market mechanisms can promote efficiency-enhancing use of nonlocal funding and limit distortions

Variable and Fixed Rate Loans: Determinants of Borrower Demand

Farmers and lenders continually make decisions about fixed and variable rate financing. Conditions are derived and illustrated under which risk-averse farmers will choose to borrow more under each type of financing and under which they will prefer each type of financing when debt is unconstrained or predetermined

FARM CREDIT CONDITIONS DURING THE AGRICULTURAL CONTRACTION OF THE 1980'S AND NOW

Speech and PowerPoint Presentatio

Can Federal Action Improve Efficiency in the Market for Farm Loans?

Federal actions could improve efficiency and competition in the market for farm loans by lowering barriers to market entry and reducing market segmentation. Such actions might include changes to existing charters of Government-sponsored enterprises (GSE's), regulatory reforms affecting commercial banks and GSE's, and continued antitrust vigilance. Federal action may be justified because 93 percent of rural banking markets are still classified as noncompetitive despite past Federal action. Previous action improved efficiency by integrating isolated rural credit markets with national money markets and by promoting market innovation

Bankruptcy Costs Under Chapter 12

Chapter 12 bankruptcy, Adjustment of Debts of a Family Farmer With Regular Annual Income, will expire on October 1, 1993, unless Congress intervenes. Chapter 12 imposes certain economic costs, referred to as bankruptcy costs and considered deadweight losses to the economy. The magnitude of these costs is an important element in the debate to renew or extend Chapter 12. Based on White's model of indirect bankruptcy costs, total bankruptcy costs under Chapter 12 may be between 90 and 100 percent of the value of farm assets at the time of filing. This cost compares with estimates of 54 to 60 percent for farms and other businesses filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code

Variable and Fixed Rate Loans: Determinants of Borrower Demand

Farmers and lenders continually make decisions about fixed and variable rate financing. Conditions are derived and illustrated under which risk-averse farmers will choose to borrow more under each type of financing and under which they will prefer each type of financing when debt is unconstrained or predetermined