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  • 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. 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. 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. 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. 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 ■ $5 billion/year
  • 6. Farm Bill Goals■ Risk Management (1980s – Present) ■ Modern crop insurance legislation of 1980, 1994, and 2000 ■ Ad hoc disaster assistance • SURE (2008-2011) ■ ACRE – (2008-present)
  • 7. ACRE Enrollment in 2009 Selected DCP DCP Acres ACRE ACRE Percent Percent Commodities Farms Farms Acres ACRE ACRE Farms Acres Corn 1,130,285 70,454,400 105,387 12,995,012 8.5% 15.6% Soybeans 885,312 42,263,737 97,216 7,639,025 9.9% 15.3% Grain 269,240 10,678,713 13,736 835,945 4.9% 7.3% Sorghum Wheat 809,401 62,966,761 61,875 9,143,849 7.1% 12.7% Upland Cotton 186,417 17,604,272 966 30,117 0.5% 0.2% Rice 45,703 4,270,846 8 384 0.02% 0.01% Peanuts 28,449 1,437,355 31 387 0.1% 0.03% U.S. Total 1,541,329 222,044,292 128,620 32,528,628 7.7% 12.8%Source: USDA Farm Service AgencyAvailable from USDA-FSA at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=dccp&topic=landing
  • 8. Farm Income Safety Net Comparison Corn Prices and DCP 8.00 7.00 6.00$/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. Farm Income Safety Net Comparison Nebraska Corn Revenue and ACRE 1,400 1,200 1,000$/Acre 800 600 400 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 NE ACRE Guarantee-Irrigated NE ACRE Guarantee-Nonirrigated NE Act/Proj Revenue-Irrigated NE Act/Proj Revenue-Nonirrigated
  • 10. Farm Income Safety Net Comparison Cotton Prices and DCP 1.25 1.00$/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. 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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