The Food and Agricultural Policy Research Institute (FAPRI) has conducted a
preliminary analysis of the impacts of the Farm Security and Rural Investment Act of
2002, the conference report on the 2002 farm bill, in response to Congressional requests

Food and Agricultural Policy Research Institute

University of Missouri: MOspace

 1Farm Security and Rural Investment Act of 2002: Preliminary FAPRI Analysis May 6, 2002  The Food and Agricultural Policy Research Institute (FAPRI) has conducted a preliminary analysis of the impacts of the Farm Security and Rural Investment Act of 2002, the conference report on the 2002 farm bill, in response to Congressional requests.  As with previous FAPRI analysis of the House and Senate farm bills, this analysis focuses on effects of the first two titles of the legislation, the titles dealing with commodity and conservation programs.  As with the earlier analysis, effects are measured relative to a baseline set of projections prepared in early 2001.    Over the next few weeks, FAPRI intends to conduct an updated analysis of the bill that will incorporate more current market information.  The new analysis will result in different estimates of prices, production, government costs, farm income, and other indicators.   Without prejudging results of the forthcoming analysis, please note that market prices for several commodities are currently lower than FAPRI had projected in its 2001 baseline.  With those caveats in mind, FAPRI estimates the following impacts of the first two titles of the legislation relative to the 2001 current-policy baseline.  · Relative to the baseline, net outlays on commodity programs increase by $49.7 billion over the next 10 years.  The corresponding estimate of the Congressional Budget Office (CBO) was $47.7 billion, as compared to their April 2001 Budget Resolution baseline. · The conservation title increases net outlays over the next ten years by $13.2 billion over the FY02-11 period. · Total area planted to major crops increases slightly in response to higher support levels, as increases in grain and cotton areas more than offset reductions in soybean area. · Grain and cotton prices fall slightly in response to increased production, while oilseed prices increase marginally. · The new dairy payment program results in a small increase in milk production and lower milk prices. · The commodity program provisions of the legislation increase net farm income by an average of  $3.8 billion per year, and the conservation programs contribute another $0.7 billion per year. · Given a series of assumptions about how programs would be classified, there is a 19.3 percent chance that the U.S. will exceed its World Trade Organization (WTO) limit on amber box farm subsidies in the 2002 marketing year.   · Plausible alternative classifications of counter-cyclical payments and other USDA programs would significantly alter the estimated probabilities of exceeding the WTO limit.    2Table 1.  Impacts of the Farm Security and Rural Investment Act of 2002 on the U.S. Crop SectorUnits 2002 2003 2004 2005 2006 2007 2008 2009 2010 02-10 avg.Planted area (Changes on a crop-year basis relative to a March 2001 baseline)  9 major crops* mil. acres 2.09 1.96 1.46 1.14 0.90 0.66 0.47 0.35 0.23 1.03    Wheat mil. acres 1.19 1.10 0.69 0.55 0.36 0.27 0.15 0.10 0.06 0.50    Corn mil. acres 1.31 1.15 0.80 0.63 0.53 0.43 0.31 0.26 0.20 0.62    Soybeans mil. acres -1.33 -1.17 -0.82 -0.76 -0.67 -0.60 -0.48 -0.42 -0.38 -0.74    Upland cotton mil. acres 0.11 0.10 0.12 0.10 0.08 0.07 0.06 0.05 0.04 0.08    Rice mil. acres 0.02 0.01 0.02 0.01 0.01 0.01 0.01 0.01 0.01 0.01    Sorghum mil. acres 0.47 0.46 0.39 0.34 0.30 0.23 0.19 0.16 0.12 0.30    Barley mil. acres 0.12 0.08 0.07 0.08 0.09 0.08 0.08 0.06 0.05 0.08    Oats mil. acres 0.17 0.19 0.18 0.18 0.17 0.14 0.14 0.12 0.11 0.16    Sunflowers mil. acres 0.03 0.04 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02Crop prices  Wheat $/bu. -0.04 -0.05 -0.04 -0.03 -0.03 -0.02 -0.01 -0.01 -0.01 -0.03  Corn $/bu. -0.04 -0.06 -0.06 -0.05 -0.04 -0.03 -0.02 -0.02 -0.01 -0.04  Soybeans $/bu. 0.09 0.08 0.06 0.05 0.04 0.04 0.03 0.03 0.03 0.05  Upland cotton $/lb. -0.002 -0.003 -0.003 -0.003 -0.002 -0.002 -0.002 -0.002 -0.001 -0.002  Rice $/cwt -0.05 -0.05 -0.06 -0.05 -0.05 -0.05 -0.04 -0.03 -0.03 -0.05  Sorghum $/bu. -0.06 -0.08 -0.07 -0.06 -0.05 -0.04 -0.03 -0.02 -0.02 -0.05  Barley $/bu. -0.05 -0.06 -0.05 -0.05 -0.04 -0.04 -0.03 -0.02 -0.02 -0.04Crop gross returns**  Wheat $/bu. 0.48 0.38 0.35 0.29 0.23 0.18 0.15 0.13 0.11 0.26  Corn $/bu. 0.22 0.20 0.19 0.16 0.13 0.11 0.09 0.07 0.06 0.14  Soybeans $/bu. 0.30 0.30 0.28 0.28 0.27 0.27 0.26 0.26 0.26 0.28  Upland cotton $/lb. 0.089 0.086 0.083 0.079 0.074 0.067 0.063 0.058 0.053 0.07  Rice $/cwt 1.13 0.93 0.90 0.78 0.71 0.59 0.56 0.51 0.45 0.73  Sorghum $/bu. 0.35 0.33 0.30 0.27 0.22 0.20 0.17 0.14 0.12 0.23  Barley $/bu. 0.18 0.15 0.12 0.14 0.12 0.11 0.10 0.09 0.08 0.12* Wheat, corn, soybeans, upland cotton, rice, sorghum, barley, oats, and sunflowers** Gross returns include program paymentsTable 2.  Impacts of the Farm Security and Rural Investment Act of 2002 on the U.S. Dairy SectorUnits 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 02-11 avg.(Changes on a calendar-year basis relative to a December 2001 baseline)Milk production bil. lbs. 0.8 1.1 1.2 1.2 0.8 0.5 0.3 0.2 0.1 0.1 0.6All-milk price $/cwt -0.12 -0.22 -0.33 -0.41 -0.16 -0.16 -0.17 -0.13 -0.09 -0.06 -0.18Gross returns* $/cwt 0.38 0.31 0.21 0.11 -0.16 -0.16 -0.17 -0.13 -0.09 -0.06 0.02* Gross returns include total program payments divided by total milk productionTable 3.  Impacts of the Farm Security and Rural Investment Act of 2002 on CCC Net OutlaysUnits 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 02-11 total(Changes on a fiscal-year basis relative to a March 2001 baseline)Title I (Commodities) $ bil. 3.62 4.61 7.67 7.43 6.05 5.15 4.01 4.19 3.71 3.23 49.66Title II (Conservation) $ bil. 0.34 0.45 0.83 1.20 1.52 1.64 1.64 1.74 1.86 1.98 13.21  Titles I and II $ bil. 3.97 5.06 8.50 8.63 7.56 6.80 5.65 5.93 5.57 5.21 62.87Table 4.  Impacts of the Farm Security and Rural Investment Act of 2002 on Net Farm IncomeUnits 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 02-11 avg.(Changes on a calendar-year basis relative to a March 2001 baseline)Title I (Commodities) $ bil. 4.57 6.11 5.47 5.08 3.99 2.61 2.95 2.72 2.41 2.12 3.80Title II (Conservation) $ bil. 0.09 0.28 0.50 0.71 0.89 0.92 0.86 0.87 0.90 0.93 0.70  Titles I and II $ bil. 4.66 6.39 5.97 5.79 4.88 3.53 3.81 3.59 3.31 3.05 4.50 3    History      FAIR Act FSRIA Change      FAIR Act FSRIA Change98-00 Crops 2002 Crop 2002 Crop from FAIR 02-07 Crops 02-07 Crops from FAIRAL 110,376 46,925          95,472          48,547          42,307            85,825            43,518            AK 263 83                 135               52                 83                   142                 59                   AZ 117,953 50,010          139,669        89,659          46,219            128,240          82,021            AR 811,370 567,921        811,113        243,192        484,659          684,582          199,922          CA 530,775 319,844        565,830        245,987        287,852          500,509          212,657          CO 248,966 117,188        234,430        117,242        100,848          192,179          91,331            CT 2,831 1,531            2,781            1,250            1,287              2,321              1,034              DE 19,024 13,747          25,072          11,325          10,718            20,498            9,780              FL 21,604 10,150          20,916          10,766          9,375              19,049            9,674              GA 237,443 99,784          221,223        121,439        90,148            200,098          109,950          ID 181,147 85,956          176,734        90,778          75,553            142,965          67,412            IL 1,548,884 1,055,133     1,610,541     555,408        843,969          1,330,734       486,765          IN 748,542 510,114        786,568        276,454        408,925          652,038          243,113          IA 1,718,027 1,154,812     1,704,048     549,236        929,615          1,415,614       485,999          KS 1,052,347 524,289        1,039,564     515,275        441,884          844,016          402,132          KY 175,524 104,458        172,247        67,788          85,170            141,883          56,713            LA 364,270 206,223        347,058        140,836        182,456          304,144          121,688          ME 3,902 2,475            4,584            2,108            1,944              3,778              1,834              MD 59,484 40,540          70,040          29,500          31,808            56,796            24,988            MA 1,758 934               1,697            763               790                 1,424              634                 MI 296,223 187,163        285,925        98,762          151,732          236,338          84,606            MN 1,135,303 766,073        1,160,867     394,794        607,441          942,567          335,126          MS 397,293 211,101        368,476        157,375        183,386          323,602          140,216          MO 572,962 381,413        574,267        192,854        308,704          475,416          166,712          MT 297,660 129,238        266,327        137,088        116,237          218,262          102,025          NE 1,158,488 674,634        1,124,702     450,068        557,807          938,043          380,236          NV 1,994 1,021            2,063            1,042            954                 1,803              848                 NH 1,476 806               1,440            634               658                 1,172              514                 NJ 8,675 5,725            10,616          4,891            4,555              8,891              4,336              NM 51,366 22,795          45,406          22,611          20,246            39,051            18,804            NY 73,269 35,925          71,504          35,579          31,359            61,989            30,630            NC 216,734 114,441        216,635        102,194        95,716            185,788          90,072            ND 731,210 403,415        676,488        273,073        334,934          536,269          201,336          OH 534,530 369,324        567,561        198,237        292,408          463,077          170,670          OK 333,039 136,121        294,900        158,779        123,627          246,081          122,454          OR 84,030 35,389          74,660          39,271          31,803            60,705            28,902            PA 62,103 35,066          97,524          62,457          29,564            86,651            57,088            RI 92 49                 89                 40                 41                   75                   34                   SC 81,037 39,153          73,697          34,544          34,275            64,788            30,513            SD 582,180 391,814        605,878        214,064        310,215          487,005          176,790          TN 182,878 96,431          172,497        76,066          80,649            147,042          66,393            TX 1,261,042 569,687        1,151,864     582,177        512,215          1,011,791       499,577          UT 18,361 8,363            16,917          8,554            7,391              14,060            6,669              VT 4,936 2,721            4,831            2,110            2,232              3,956              1,723              VA 70,673 40,902          72,040          31,138          33,615            60,094            26,479            WA 222,744 92,240          199,026        106,786        81,362            158,729          77,367            WV 5,259 2,707            4,503            1,796            2,356              3,894              1,538              WI 350,957 206,865        338,486        131,620        171,967          286,521          114,554          WY 20,973 10,518          20,579          10,061          9,400              17,418            8,017              US 16,711,976 9,883,218     16,529,488   6,646,270     8,212,457       13,807,912     5,595,455       * Includes payments to feed grains, oilseeds, wheat, rice and cotton. Does not include peanuts, dry peas, lentils,   chickpeas, wool, mohair, or honey.(Annual Averages, Thousand Dollars)Table 5. Comparison of Crop Payments:Historical, Projected FAIR Act and FSRIA 4 Alabama * 0.42Alaska * 0.44Arizona -0.15Arkansas * 0.42California -0.09Colorado 0.02Connecticut * 0.44Delaware * 0.44Florida -0.09Georgia 0.27Hawaii * 0.44Idaho -0.02Illinois 0.56Indiana 0.51Iowa 0.55Kansas * 0.46Kentucky 0.58Louisiana * 0.42Maine * 0.44Maryland 0.48Massachusetts * 0.44Michigan 0.37Minnesota 0.56Mississippi * 0.42Missouri 0.57Montana * 0.45Nebraska * 0.46Nevada * 0.45New Hampshire * 0.44New Jersey * 0.44New Mexico -0.17New York 0.44North Carolina 0.34North Dakota * 0.49Ohio 0.53Oklahoma 0.41Oregon 0.19Pennsylvania 0.55Rhode Island * 0.44South Carolina * 0.41South Dakota 0.43Tennessee 0.51Texas 0.18Utah 0.28Vermont 0.43Virginia 0.49Washington 0.02West Virginia * 0.43Wisconsin 0.56Wyoming * 0.45United States 0.27Change in Class III Price -0.17Change in Class IV Price -0.28Direct Payment Rate on Eligible Production 0.89* - Estimate based on the USDA's distribution of dairy cows in "other states"Table 6. FAPRI Analysis of the Change in Average Milk RevenueUnder FSRIA (12/1/2001-9/30/2005)(Revenue change includes both milk price and direct payment effects)

Farm Security and Rural Investment Act of 2002: Preliminary FAPRI Analysis

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