Financial Conditions on U.S. Cotton Farms

For the last three years, U.S. cotton producers have been heavily dependent on ad hoc emergency disaster and market loss assistance to cash flow their operations. They have not been alone. Wheat, feed grains, oilseeds and rice producers have also been faced with low commodity prices, adverse weather and the need for substantial government assistance. Price support and direct payments by CCC for fiscal years 1998-2000 averaged $17.5 billion per year (USDA Ag Outlook). Has U.S. program crop agriculture turned the corner or will additional government payments likely be needed to sustain a vulnerable sector? This paper will focus on the outlook for the Agricultural and Food Policy Center’s (AFPC’s) representative cotton farms over the period 2001-2005. The results reported herein are drawn from AFPC Working Paper 00-4 which goes into greater depth on all 82 representative farms and ranches modeled by AFPC.Agribusiness, Agricultural and Food Policy, Crop Production/Industries,

Evaluation of Alternative Base Periods for a National Rice Counter Cyclical Payment Program Including Added AMTA

The analysis was completed for one year, namely, 2001 using the FAPRI baseline rice price of $6.29/cwt. as the mean price for 2001. Risk for price and yields was incorporated into the analysis to appropriately replicate the historical variability for these variables. The counter cyclical payment (CCP) payments were calculated based on a national revenue. CCP payments were assumed to be triggered if total planted acre market receipts for rice (national planted acre yield times national season average price) was less than the average national planted acre receipts for a particular base period.Agricultural and Food Policy,

Review of the American Farm Bureau Counter Cyclical Payment Program

Agricultural and Food Policy,

Can We Save the Traditional Family Farm?

What is a traditional family farm? Is it a family of four living on a farm and supplying all of the labor, capital and management or is it a family corporation with four families supplying all of the capital and management? These types of questions continue to arise in policy debates, as they have for many years. While subject to heated debate and the core of many people’s positions on farm programs the answer is more sociological as it is becoming less and less economically relevant. Whether these types of farms or any other farm sizes should survive is not a question that can be answered by a policy analyst. The job of an analyst is to determine if and under what conditions family farms can survive. To this end, this paper reviews the various definitions of family farms and draws inferences as to the economic and financial survival of these different size farms using the results generated from simulating representative farms.Agricultural and Food Policy,

Counter-Cyclical Farm Safety Nets

Since the 1920's, the federal government has used an array of farm programs to provide a “safety net” for American agriculture. Farm programs have used price supports, disaster payments, income supports, direct payments, and supply management to provide a safety net for particular markets and producers. This array of farm programs has rarely been organized or managed with the sole purpose of providing a minimum income level to farmers. With the exception of set aside programs, the programs have provided incentives for production and the diversification of production through out the continental United States. While the FAIR Act of 1996 has been generously applauded for allowing producers planting flexibility, maintaining export competitiveness through marketing loan programs, and maintaining production, the Act has been criticized for its lack of a sufficient safety net. All crop insurance programs and marketing loan provisions may be considered safety nets. However, the ad hoc passage of emergency relief in each of the last three years 1998-2000 suggests that these programs have not provided sufficient support to program crop agriculture. The safety net issue, therefore, will likely be a major source of debate in crafting the next farm bill. Can the U.S. government reduce the liquidity problem facing major crop agriculture while pressing the popular provisions of the FAIR Act? Developing a whole farm safety net proposal is one alternative being studied.Agricultural and Food Policy,

ECONOMIC IMPACTS OF THE 1981 AGRICULTURAL ACT AND THE 1981 TAX ACT ON TEXAS HIGH PLAINS FARMERS

Political Economy,

EFFECTS OF ALTERNATIVE FARM PROGRAMS AND LEVELS OF PRICE VARIABILITY ON TEXAS COTTON FARMS

This study examines the effects of alternative government farm programs and hypothetical price variability levels on two Texas cotton farms which were simulated stochastically over a 10-year period. Results indicate that a combination of high price variability and participation in government programs stimulates growth and wealth accumulation.Public Economics,

American Agriculture: What We Can Expect - National Symposium on the Future of American Agriculture, University of Georgia: August 1999

The Agricultural and Food Policy Center (AFPC) of the Texas A&M University System is pleased to be invited to address this symposium addressing the future of U.S. agriculture. As a participant in the FAPRI consortium, AFPC monitors the economic conditions of U.S. agriculture at the farm and ranch level. To accomplish this, AFPC maintains approximately 80 crop, dairy, beef and pork representative farms throughout the nation. In the interest of time, this paper will focus only on the economic condition of the 41 feed grain/oilseeds, wheat, cotton and rice farms through the year 2002. Anyone interested in the livestock operations, or more detail on the crop farms, are directed to the AFPC web site at http://afpc1.tamu.edu. The publications included at this site provide greater detail about the process AFPC employs to develop the representative farms, their structure and their financial characteristics.Agribusiness, Agricultural and Food Policy,

An Analysis of Whole Farm Revenue Safety Net Options in Agriculture

Despite many years of experience, the federal government continues to seek a farm program that holds the potential for providing a politically acceptable safety net for farmers. This study demonstrates that, with the 2002 Farm Bill, AMTA, and marketing loan provisions continuing, a whole farm revenue safety net has the potential for simplifying existing farm programs, while enhancing the financial position of US farmers. There remains the need for further analysis of the impacts of the options analyzed on supply response by farmers.Agricultural and Food Policy,

Post-Freedom to Farm Shifts in Regional Production Patterns

The FAIR Act of 1996, also known as the Freedom to Farm Act (ACT) dismantled many of the agriculture policy tools in use for the last 25 years. Gone were target prices, deficiency payments, and set asides. In their place were expanded marketing loan programs to effectively include wheat and feed grains and oilseeds in addition to cotton and rice. Full planting flexibility has been popular with farmers who are no longer constrained by base acres. Grain merchants and other volume oriented agribusinesses praise the elimination of set asides. The sharp decline in farm prices for all major program commodities since 1996 has left most farmers questioning the income safety net provisions of the FAIR Act. The flexibility and marketing loan provisions continue to be praised. Farm program changes in the 1996 farm bill rendered methods of crop supply response estimation based on econometric models, using historic data, difficult at best. Yet it can, and has been, hypothesized that the Act resulted in major shifts in regional crop production patterns. This paper draws inferences from changes in acres planted among crops for representative farms in the Texas A&M Agricultural and Food Policy Center’s (AFPC) farm data base. AFPC has maintained longitudinal data for more than three dozen representative crop farms across states, regions, farm size, and type of farm since 1990. The farms were updated in 1999 as to their crop mix changes following the ACT and the crop mix changes observed in the updates are summarized here. United States aggregate production shifts are identified from NASS data. Implications for future potential acreage changes are identified. The commodity focus includes feedgrains, soybeans, wheat, cotton, and rice.Agricultural and Food Policy,