24 brad lubben

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24 brad lubben

  1. 1. Changing Farm Policies for Changing Times Bradley D. Lubben, Ph.D. Extension Assistant Professor and Policy Specialist Department of Agricultural Economics University of Nebraska-Lincoln UNL Farm Bill information – farmbill.unl.edu USDA Farm Bill information – www.usda.gov/farmbill
  2. 2. Farm Bill Goals■ A continued evolution toward risk management ■ 1930s – 1996 • Supply control and price support ■ 1970s – present • Income support ■ 1980s – present • Risk management
  3. 3. Farm Bill Goals■ Supply control and price support (1930s – 1996) ■ Marketing allotments ■ Production quotas ■ Non-recourse commodity loans (-1985) ■ Acreage reduction (-1996) ■ Government stocks/farmer-owned reserve (-1996)
  4. 4. Farm Bill Goals■ Income support (1970s – Present) ■ Target prices/deficiency payments (1973-1996) • Counter-cyclical payments (2002-present) ■ Non-recourse marketing loans (1985-present) ■ Direct payments (1996-present)
  5. 5. A Short Review of Direct Payments Decoupled, fixed, transition(?) payments■ Popular in 1996 ■ Popular target in because of 2011 because of ■ Flexibility ■ Paid regardless of ■ WTO friendly price and income ■ Secured a ■ Accrue to large disappearing farms baseline ■ $5 billion/year
  6. 6. Farm Bill Goals■ Risk Management (1980s – Present) ■ Modern crop insurance legislation of 1980, 1994, and 2000 ■ Ad hoc disaster assistance • SURE (2008-2011) ■ ACRE – (2008-present)
  7. 7. ACRE Enrollment in 2009 Selected DCP DCP Acres ACRE ACRE Percent Percent Commodities Farms Farms Acres ACRE ACRE Farms Acres Corn 1,130,285 70,454,400 105,387 12,995,012 8.5% 15.6% Soybeans 885,312 42,263,737 97,216 7,639,025 9.9% 15.3% Grain 269,240 10,678,713 13,736 835,945 4.9% 7.3% Sorghum Wheat 809,401 62,966,761 61,875 9,143,849 7.1% 12.7% Upland Cotton 186,417 17,604,272 966 30,117 0.5% 0.2% Rice 45,703 4,270,846 8 384 0.02% 0.01% Peanuts 28,449 1,437,355 31 387 0.1% 0.03% U.S. Total 1,541,329 222,044,292 128,620 32,528,628 7.7% 12.8%Source: USDA Farm Service AgencyAvailable from USDA-FSA at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=dccp&topic=landing
  8. 8. Farm Income Safety Net Comparison Corn Prices and DCP 8.00 7.00 6.00$/Bushel 5.00 4.00 3.00 2.00 1.00 0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 Loan Rate CCP Trigger Price CCP Target Price Market Price
  9. 9. Farm Income Safety Net Comparison Nebraska Corn Revenue and ACRE 1,400 1,200 1,000$/Acre 800 600 400 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 NE ACRE Guarantee-Irrigated NE ACRE Guarantee-Nonirrigated NE Act/Proj Revenue-Irrigated NE Act/Proj Revenue-Nonirrigated
  10. 10. Farm Income Safety Net Comparison Cotton Prices and DCP 1.25 1.00$/Pound 0.75 0.50 0.25 0.00 2004 2005 2006 2007 2008 2009 2010 2011 2012 Loan Rate CCP Trigger Price CCP Target Price Market Price
  11. 11. Managing Risk with the Farm Income Safety Net “A Multiplicity of Confused Concepts”Scope of Risk Farm Level Area Level National LevelProtection HedgingPrice ML/LDP CCP RP/HPE AGR GRIP ACRERevenue DP SURE RPProduction CAT YP GRP PRF

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