List of References
Anderson, David P., James W. Richardson, and Edward G. Smith, 2001, “Post-Freedom to Farm Shifts in Regional Production Patterns,” AFPC Working Paper 01-6, February.
Casaburi, Gabriel and Carlos Sánchez, 2000, “Las distorsiones de los mercados mundiales de alimentos y su impacto en la Argentina,” (IERAL de Fundacion Mediterranea, Buenos Ares) March.
ERS, 2000, “U.S. Farm Program Benefits: Links to Planting Decisions & Agricultural Markets,” Agricultural Outlook (U.S. Department of Agriculture, Washington, D.C.) October, pp. 10–14.
ERS, 1996, “1996 FAIR Act Frames Farm Policy for 7 Years,” Agricutural Outlook Supplement (U.S. Department of Agriculture, Washington, D.C.) April, pp. 1–21.
FAPRI, 2001, U.S. and World Agricultural Outlook, Staff Report 1-01, January 2001 (Food and Agricultural Policy Research Institute, Iowa State University, Ames, IA).
Lin, William, Paul C. Wescott, Robert Skinner, Scott Sanford, and Ganiel G. De La Torre Ugarte, 2000, “Supply Response Under the 1996 Farm Act and Implications for the U.S. Field Crops Sector,” Technical Bulletin No. 1888, July.
McCaw, George, 1996, 1996 Farm Bill Analysis (Policy Analysis Branch, Ministry of Agriculture, Food, and Rural Affairs, Government of Ontario, Guelph, Ontario, Canada), available at: http://www.gov.on.ca/OMAFRA/english/policy/farmbill.html.
Morehart, Mitchell, James Ryan, and Robert Green, 2001, “Farm Income and Finance: the Importance of Government Payments,” Agricultural Outlook Forum 2001 (ERS, USDA, Washington, D.C.) February 22.
Westcott, Paul and Michael Price, 1999, “Impacts of the U.S. Marketing Loan Program for Soybeans” (Economic Research Service, USDA, Washington, D.C.).
USDA, 1996, Provisions of the Federal Agricultural Improvement and Reform Act of1996, eds. Frederick J. Nelson and Lyle P. Schertz, (Commercial Agriculture Division, ERS, USDA, Washington, D.C.), Agriculture Information Bulletin No. 729.
Prepared by Chris MacDonagh-Dumler.
Even though the price supports have been extended to 2001 (originally meant to end in 1999), Gardner (2001) esimates that the FAIR Act has reduced the deadweight loss from the dairy programs by $1.3 billion.
The interest rates are at the cost of funds to the U.S. Treasury plus 100 basis points.
The Secretary of Agriculture has limited discretion to adjust these rates using a legislated formula (85 percent of a five-year crop average, excluding the highest and lowest priced years). The rates are also subject to crop-specific minimums and maximums. The loan rates have not been adjusted since 1996.
The loan-deficiency payment is calculated as the difference between the loan rate and a “posted county price,” which is a county-specific price meant to reflect the cost of transporting a crop to market. However, the difference between the spot price and the posted county price can be large.
Morehart, Ryan, and Green (2001) describe how to estimate the current value of agricultural real estate prices, assuming that producers received no government support. Their methodology is reproduced here with slightly updated data.
See Gardner (2001). Anderson, Richard, and Smith (2001) estimate a similar impact. When FAIR was passed, the estimate of the impact was much smaller; soybean acreage was expected to increase 1.4 million acres and wheat was expected to decline only 0.9 million acres (Lin, et al. (2000)).
See ERS (2000). Since total planted acreage for major field crops has fluctuated between 220 million and 250 million acres during the 1990s, this substitution represents approximately 2 percent of the overall stock of agricultural land.
If the soybean loan rate is adjusted (as the law allows), then the USDA forecasts that the loan rate will equal the farm price of soybeans sometime at the end of 2004.
OECD (1999) provides cross-country comparisons and calculates the benefit at all levels of government. ERS (2000) makes a similar point, noting that 64 percent of all farms did not receive government payments in 1997, and 60 percent of the total payments go to farms with gross sales of at least $50,000 in 1999.
See OECD (1999); in that report, the top quartile of producers in the median OECD country received 65 percent of the benefit from price supports.
The OECD’s estimate, the producer-support estimate, approximates the total value of government support programs to agricultural producers. This estimate includes both the value of direct government payments and imputed value of price supports, and other price or quantity restrictions that may not involve government outlays but benefit producers.