Project Summaries

03-365TX  Project Manager: J. M. Reeves

ANALYSIS OF FARM POLICY IMPACTS ON TEXAS COTTON FARMS

James Richardson, Texas A&M University

The Agricultural and Food Policy Center (AFPC) at Texas A&M University develops and maintains data to simulate 95 representative crop, dairy, and livestock operations in major production areas in 28 states. The chief purpose of this analysis is to project those farms' economic viability by region and commodity for 2012 through 2017. The data necessary to simulate the economic activity of these operations is developed through ongoing cooperation with panels of agricultural producers in each of these states. Characteristics for each of the operations in terms of location, size, crop mix, assets, and average receipts are available from researcher. The location of these farms is primarily the result of discussions with staffers for the U.S. House and Senate Agriculture Committees. Information necessary to simulate the economic activity on these representative farms is developed from panels of producers using a consensus-building interview process. Normally, two farms are developed in each region using separate panels of producers: one is representative of moderate size, full-time farm operations, and the second panel usually represents a farm two to three times larger. The data collected from the panel farms are analyzed in the whole farm simulation model (FLIPSIM) developed by AFPC. The producer panels are provided pro-forma financial statements for their representative farm and are asked to verify the accuracy of simulated results for the past year and the reasonableness of a seven-year projection. Each panel must approve the model's ability to reasonably reflect the economic activity on their representative farm prior to using the farm for policy analyses. The Food and Agricultural Policy Research Institute (FAPRI) provided projected prices, policy variables, and input inflation rates in their January 2011 Baseline. (FAPRI projects "macro" impacts of policies and AFPC is responsible for the farm level impacts of varying policies.) The specific objective for this project is to keep and update representative farms for Texas (core project is for all representative farms) as well as for other cotton producing states that have representative farms. Discussions occur at producer meetings that provide the AFPC with critical information about issues vital to cotton producers across Texas and other cotton producing regions. These personal interactions allow the AFPC analysts to better identify issues for study. Additionally, these meetings provide the AFPC with specific examples to relay to the Agriculture Committees on how policy is actually implemented and working in real situations. There are 16 representative cotton farms.

In 2012, there were two baselines conducted - one in September and one in December. In the September baseline, eight of the sixteen cotton farms were classified in good overall financial condition (less than a 25% chance of negative ending cash by 2017), four were marginal (between a 25%-50% chance of negative ending cash by 2017), and the remaining four were in poor condition (greater than 50% chance of negative ending cash by 2017). In the December baseline, nine of the cotton farms were in good condition, three were in marginal condition, and four farms were projected to be in poor financial condition through 2017. There were more farms in poor condition in December than September. The December 2012 Baseline analysis can be found at the following link: http://www.afpc.tamu.edu/pubs/3/585/BP%202012-4%20(entire%20book%20to%20post%20to%20web).pdf.

 

Project Year: 2012
 

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CORE PROGRAM
▸ Cotton Incorporated Fellow
▸ Cottonseed
▸ Crop Improvement
▸ Farm-to-Mill
▸ Production Efficiency
▸ Sustainable Cotton
▸ Variety Improvement

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