Project Summaries

05-662  Project Manager: J. M. Reeves

ECONOMIC IMPACTS OF ALTERNATIVE FARM PROGRAMS ON U.S. COTTON PRODUCERS

James Richardson, Texas A&M University

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. This project also looks at alternative farm programs and their impacts on producers. There were no alternatives put forth in 2010 or 2011, but in 2012, alternatives were evaluated. It appears as if the Farm Bill could not be passed in 2012, and a Farm Bill has never been done in a Presidential election year, so it looks as if a Farm Bill will not be decided until 2013. So, the alternatives of continuing the 2008 Farm Bill will be evaluated as necessary. 

In 2012, two studies evaluating the House Ag Farm Bill proposal and the Senate Ag Farm Bill proposal were evaluated. The first was a report entitled "Impacts of Selected Provisions of the House Agriculture Committee and Senate Farm Bills." The second report was conducted at the farm sector level - a slightly more in-depth analysis. Both studies were imposed on the 64 representative crop farms maintained by the Agricultural Food Policy Center (AFPC) located at Texas A&M University.

The analysis was conducted over the 2009-2017 planning horizon using FLIPSIM (Farm Level Impact Simulation) which is AFPC's whole farm simulation model. The FLIPSIM model incorporates the historical risk faced by producers for prices and production so the safety net aspects of the bills can be compared. Several years of historical data are included in the analysis to ensure the results are tracking the financial outcomes experienced in the recent past. 

  • The farms were analyzed with the 2008 Farm Bill provisions in place through 2012. From 2013-2017, each of the 64 farms was analyzed assuming the provisions of the proposed House and Senate packages.
  • The 2008 Farm Bill payment limit provisions were in place. Starting in 2013, all farms are subject to the applicable payment limits from the Senate and House packages. No off-farm income was included in the analysis in order to reflect the ability of the farm to provide for family living and capital replacement.
  • Each farm was assumed to start the analysis with 20% debt.
  • All crop farms are assumed to carry crop insurance with products and coverage levels common to their area.

The farms preference for one policy alternative over another was based on the alternative with the higher average net cash farm income over the life of the farm bill. Under this analysis, 60 of the 64 representative farms would prefer the House option over any Senate option due to a more "target price oriented" program. Copies of this report are available at http://www.afpc.tamu.edu/pubs/0/578/wp%202012-03%20-%20to%20post%20to%20web.pdf.

 

Project Year: 2012
 

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CORE PROGRAM
▸ Cotton Incorporated Fellow
▸ Cottonseed
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