Investigating the Redundancies in Current Farm Programs

Farm Programs, Agricultural and Food Policy, Risk and Uncertainty,

The Impact of Increased Planting Flexibility on Planting Decisions Across Texas

Increased acreage planting flexibility granted through the last three farm bills has allowed agricultural producers to make production choices without government programs driving their decisions. Planted acre data for program crops in seven Texas regions is used to describe response to varying degrees of flexibility granted through decoupled payments.Crop Production/Industries,

Economic Outlook for Representative Cotton Farms Given the August 2006 FAPRI/AFPC Baseline

The majority of the cotton farms are in poor overall financial condition under the August 2006 Baseline. Drought conditions this year will deplete cash built from more favorable yields in 2004 and 2005 in many cases. In addition, the poor financial performance of the farms is attributed in part to the large increase in input prices. Fuel costs, previously projected to decrease modestly in 2005 and 2006, are now more accurately depicted as significant increases, building further on the large increases experienced in 2003 and 2004. The increase in cost is not limited to fuel expense for trucks, equipment, and irrigation motors, but includes the cost of nitrogen fertilizer and ag-related services which are closely linked to energy prices. Many cotton producers have adopted genetically modified seed and more expensive conventional varieties in order to enhance efficiencies and achieve higher yields; however, the tradeoff for these gains is increased cost of seed and technology fees. Steel prices have skyrocketed, thus increasing the cost of machinery along with the cost of repairing existing machinery. To keep quality employees on the farm, producers are faced with rising wage pressure from competing industries. The bottom line is producers are threatened by the rising cost of doing business while modest projected increases in cotton and other commodity prices fail to outpace these inflationary pressures.Agribusiness, Agricultural and Food Policy, Crop Production/Industries,

Direct experimental observation of binary agglomerates in complex plasmas

A defocusing imaging technique has been used as a diagnostic to identify binary agglomerates (dimers) in complex plasmas. Quasi-two-dimensional plasma crystal consisting of monodisperse spheres and binary agglomerates has been created where the agglomerated particles levitate just below the spherical particles without forming vertical pairs. Unlike spherical particles, the defocused images of binary agglomerates show distinct, stationary/periodically rotating interference fringe patterns. The results can be of fundamental importance for future experiments on complex plasmas

The Farm Level Impacts of Replacing Current Farm Programs with a Whole Farm Revenue Program

This study evaluates the farm level economic impacts of implementing a whole farm revenue insurance program in lieu of current government program payments on agricultural producers in major production areas of the United States. Realizing a multitude of viable options exist, this study demonstrates one way a whole farm revenue coverage program could work at the farm level and makes comparisons between the current baseline situation and alternative levels of revenue coverage implementation.agricultural policy, simulation, representative farms, government payments, crop insurance, revenue coverage, Agricultural and Food Policy,

Impacts of Budget Reconciliation on U.S. Crop Producers

The President has called for a $6.96 billion savings in expenditures to agriculture over a five year period. A budget reconciliation is required to achieve these targeted savings from farm bill authorized expenditures. This study uses optimal control theory and farm level simulation to quantify the impacts on U.S. crop producers of reducing federal spending for agricultural income supports. Results indicate that the least harmful method for the Agricultural Committees to achieve budget savings of$3 billion is to reduce loan rates. At higher levels of net budget savings, some risk adverse decision makers would prefer that the Committees reduce target prices.Agricultural and Food Policy,

An Economic Analysis of U.S. Farm Programs Including Senate and House Farm Bills on Representative Farms

Agricultural policy continues to play a large role in risk reduction for agricultural producers in the United States. However, current budget deficits and growing national debt has many policy makers looking for ways to change the farm safety net. The interactions of current and new policy tools including crop insurance and representative farms were examined in a simulation model for four representative farms. Various outcomes were examined with attention primarily focused on (1) magnitude and frequency of farm program payments, (2) government costs and farmer return on insurance premiums paid, (3) coefficient of variation of farm revenue and probability of negative ending cash, and (4) Stochastic Efficiency with Respect to a Function (SERF) analysis. Results indicated that Supplemental Coverage Option (SCO) and Stacked Income Protection Plan (STAX) programs provide high farmer returns and positive mean payments. However, SCO, STAX, and crop insurance provided lower levels of protection when both the base and harvest price decline by the same amount. Overall, the House farm bill was preferred by all four farms for every scenario. Additionally, the results for Alternative 4, which examined different insurance coverage levels, showed that it was possible for a representative farm to lower its insurance coverage and improve its financial position. The results indicate how farm programs cover various types of potential losses faced by producer which makes the results meaningful to both producers and policy makers alike

Economic Outlook for Representative Dairies Given the August 2007 FAPRI/AFPC Baseline

While projected milk prices are a primary determinant of the financial viability of the representative dairies, the prices of feed crops and cattle prices can also have an impact. Most of the dairies produce hay, silage, and other crops and are often net buyers. Commodity prices have a major impact on dairy returns because feed represents the number one cost for dairies. With the recent increase in demand for corn, prices are projected to increase, potentially affecting rations and feed costs. Projected milk and livestock prices for FAPRI’s August 2007 Baseline are presented in Table 1. In general, milk prices are projected to decrease each year from 2007 though 2012 after the large increase in price from 2006 to 2007. Cattle prices are expected to decrease with the downturn in the cattle cycle. Specifically, prices for milk and cattle are projected to move as follows: • U.S. All Milk price is expected to decrease from $19.07/cwt in 2007 to$15.72/cwt in 2012. • The localized prices for each state move with the U.S. All Milk price. • Feeder cattle prices are projected to decrease from $117.53/cwt in 2007 to$102.03/cwt in 2012. • Cull cow prices start at $50.94/cwt in 2007, increase to$52.98/cwt in 2008 and then decrease to $47.14/cwt by 2012. Projected crop prices for FAPRI’s August 2007 Baseline are also summarized in Table 1. Individual crop prices are projected to move as follows: • The U.S. all hay prices are expected to fall from$123.20/ton in 2007 to $110.86/ton in 2009 and then rise to$111.52/ton in 2012. • Corn prices start at $3.10/bu in 2007 and increases in 2008 to$3.38/bu and then falls to $3.25/bu by 2012. • Soybean Meal is expected to fall from$207.88/ton in 2007 to $192.68/ton by 2012. Projected annual rates of change for variable cash expenses are summarized in Table 2. The rate of change in input prices comes from FAPRI’s August 2007 Baseline. Based on projections from Global Insight, annual interest rates paid for intermediate-term and long-term loans and interest rates earned on savings are also reported in Table 2. Assumed annual rates of change in land values over the 2007-2012 period are provided by the FAPRI Baseline and are projected to range between a 3.51% and 13.68% per year.

Impacts of the Administration's 2007 Farm Bill Proposal on Representative Crops, Dairy and Beef Cattle Farms -- Revised

For the first time in two decades, the Secretary of Agriculture provided the House and Senate Agriculture Committees a farm bill proposal from the Administration. The Administration’s Proposal is a comprehensive revision of the 2002 farm bill with suggested changes to all titles. Four major proposed changes to Title 1 Commodity Programs are analyzed and reported in this Briefing Paper. The four key policy changes analyzed are: - an increase in direct payment rates, - a reduction in loan rates for most crops, - the replacement of the counter cyclical payment (CCP) program with a counter cyclical revenue (CCR) program, and - a change in eligibility for farm program payments by using $200,000 adjusted gross income (AGI) for a means test. The economic impact of the Administration’s Proposal on the viability of 99 representative crop, dairy, and beef cattle farms is compared to a base situation of continuing the current farm bill through 2012. This report is a companion to FAPRI-UMC Report #11-07 that contains sector level impacts.Agribusiness, Agricultural and Food Policy, Crop Production/Industries, Livestock Production/Industries,

Economic Outlook for Representative Cotton Farms Given the August 2005 FAPRI/AFPC Baseline

The Agricultural and Food Policy Center (AFPC) at Texas A&M University develops and maintains data to simulate eighteen representative cotton operations in major production areas of seven states. The chief purpose of this analysis is to project those farms’ economic viability for 2005 through 2009. The data necessary to simulate the economic activity of these operations is developed through ongoing cooperation with panels of agricultural producers in each of these states. The Food and Agricultural Policy Research Institute (FAPRI) provided projected prices, policy variables, and input inflation rates in their August 2005 Baseline. Under the August 2005 Baseline, only the moderately sized Tennessee cotton farm (TNC1900) and Louisiana cotton farm (LAC2640) are considered in good liquidity condition (less than a 25 percent chance of negative ending cash during 2005-2009). Five cotton farms (TXSP3745, TXRP2500, TXMC3500, TXCB1850, and TNC4050) have between a 25 percent and a 50 percent likelihood of negative ending cash. The remaining eleven cotton farms have greater than a 50 percent chance of negative ending cash. Additionally, TNC1900 is the only farm in the set considered in good equity position (less than a 25 percent chance of decreasing real net worth during 2005-2009). Three cotton farms (TXRP2500, TXMC3500, and TXCB1850) have between a 25 percent and 50 percent likelihood of losing real net worth, and the remaining fourteen cotton farms have greater than a 50 percent probability of decreasing real net worth.Agribusiness, Agricultural and Food Policy, Crop Production/Industries,