Impacts of Alternative Programs Indicated by the FAPRI Analysis

Abstract

Four alternative agricultural programs are evaluated quantitatively for various agricultural sector, budgetary, and consumer impacts: (1) a continuation of the Food Security Act of 1985 (FSA85) largely as it has operated so far; (2) extending the marketing loan provision in FSA85 to wheat, feed grains, and soybeans; (3) the Administration proposal in the FY88 budget; and (4) the Harkin-Gephardt. The evaluation included specific quantitative impact estimates for FY88 to FY91, and a more qualitative discussion of long-term impacts. The evaluation found substantially different impacts from the alternative programs on government cost, net farm income, level and value of agricultural exports, crop acreage planted, carryover stock levels, crop prices, program participant returns, and the livestock sector. For instance, under the Administration proposal, net farm income was projected to be lower by 20 percent or more annually from 1989 to 1991 compared to a continuation of FSA85 as it has operated so far. Under the Harkin-Gephardt Bill, increased food costs to consumers exceed farm income gains and government cost savings by $25 billion by 1995 compared to a continuation of FSA85. Critical assumptions used in the analysis are discussed. Continued quantitative evaluation of policy options is urged, even though it is cautioned that the results should be viewed qualitatively.