Marra Farm Bill 6 17 09

Marra Farm Bill 6 17 09

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  Michele Marra ProfessorDepartment of Agricultural and Resource Economics NCSU June, 2009
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  The basic commodityprograms remain, including direct and countercyclical payments, and loan programs. Two new safety net features have been added: The ACRE program – an optional program The SURE program – a permanent, dedicated disaster assistance program, also optional More funding for “working lands” conservation programs. More funding for nutrition programs.
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  First Option: Businessas usual. Farmers can choose to retain the full amount of the direct, and counter cyclical payments and loan programs. Second Option: Average Crop Revenue Election ( ACRE ) program. One-time choice for the life of the Farm Bill – can sign up before any crop year, but once signed in, you’re in for the life of the Bill.
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  To enroll, agrower must accept a 20% reduction in direct payments, a 30% reduction in the loan rate (totally irrelevant this year for most crops) and receive no CCP. Revenue payments from a program tied to the national price and state-level production outcomes. If you sign up for ACRE, you must sign up for all your acres and for all crops for the life of this Farm Bill. Signup ends August 14 th for this crop year.
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  The decision iscomplicated, but decision aids are available. See the following websites: http://www.card.iastate.edu/ag_risk_tools/acre/ http://www.fsa.usda.gov/FSA/webapp?area=home&subject=dccp&topic=landing Two triggers: If Actual State Revenue is below State ACRE Guarantee and If your actual farm revenue is below your Farm Acre Benchmark Then , you will get a payment
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  STATE ACRE Guarantee = 90% * 5- year Olympic State Avg. Yield * 2-year Natl. Average Marketing Year Price Restricted to < 10% change/ year Actual State Revenue = Actual State Planted Acre Yield * MAX [ Natl. Average Marketing Year Price OR 70% of the loan rate]. Farm ACRE Benchmark = Farm’s 5-yr. Olympic Avg. Yield * 2-year Natl. Average Marketing Year Price + Crop Insurance Premium per acre Actual Farm Revenue = Actual Farm’s Planted Acre Yield * MAX [Natl. Average Marketing Year Price OR 70% of the loan rate] > AND > THEN Farm Payment = 0.833 (.85 in 2012) * Actual Planted or Considered Planted Acres * [Farm’s 5-year Olympic Average Yield/State’s 5-year Olympic Average Yield] * MIN[State ACRE Guarantee – Actual State Revenue) OR State Acre Guarantee * 25%] Note: All Yields are Planted Acre Yields IF
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  Source: USDA, FSA
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  Source: USDA, FSAState-Level Guarantees – Estimated as of 6/11/09
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  The total numberof payment acres cannot exceed base acres on the farm. Provisions for assigning yields, etc. by using yields from a “similar state.” BUT… ACRE is NOT a substitute for crop insurance! It only pays up to 25% of the revenue guarantee, while crop insurance pays up to 85-90% of the yield guarantee and 100% of the price guarantee and is based on only your farm’s performance. It has been shown (by me and others) that state yields are much less variable than individual farm yields, so state trigger should activate less often.
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  Studies have shownthat a payout occurs about 30% of the time (national average). However, studies have shown that ACRE is more likely to benefit producers if: A state has higher yield variability (Southeast, Mid-Atlantic) Crops with prices well above the loan rate (soybeans, corn, wheat) States where yield does not impact national price (NC) Crops with higher increases in yields in the recent past (corn)
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  Where to gofor updates: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=dccp&topic=landing I will email this slide set to all county directors and ask them to forward to their ag agents. If you don’t get a copy in one week, and want one, ask your county director or email me: [email_address]
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  CAP AND TRADERenewable fuels and carbon intensity Feds will apply “weights” to each fuel source Looks like ethanol and biodiesel will be “punished” by adding a penalty for “land use changes” Comment period Carbon sequestration with reduced tillage A possibility, but not a dead cert No market yet. Need certification process.
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  World incomes andthe demand for food. Biotechnology and market access. Others?