Abstract
Government program deficiency payments traditionally have played an important role in stabilizing farm incomes. With the Federal Agricultural Improvement and Reform (FAIR) Act of 1996, net farm income risk most likely will increase because government payments no longer are tied directly to production levels or commodity prices. In a simulation covering Kansas farms from 1996 through 2002, we contrast, in this analysis, expected outcomes for farm income and its variability under FAIR with those of farm legislation in place before 1996. With FAIR, payments to Kansas farmers drop from $0.58 billion in 1996 to $0.35 billion by 2002. Based on projections, payments under the 1990 farm bill would have been only $0.21 billion in 1996, but would increase to $0.44 by 2002. Although average seven-year annual incomes will be higher with FAIR, income variability will increase substantially relative to previous legislation. The smallest increases in expected income and the greatest increases in income variability will occur in arid nonirrigated regions.
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