Commodity Programs Research Articles

Sizing Up the Farm Bill Safety Net

Lower commodity prices and higher production costs over the past couple of years have crop producers concerned about tighter margins and cash flow for their operations. The federal farm income safety net provides substantial support to producers through commodity programs, crop insurance programs, and disaster assistance. Crop insurance has been the primary safety net tool for producers in recent years as commodity prices generally fluctuated at levels above commodity program support levels. Even declining markets in the past couple years left prices that remained above Price Loss Coverage (PLC) support levels and revenue calculations above Agriculture Risk Coverage (ARC) guarantees unless there were significant yield losses at the county level for ARC-CO or the individual farm level for ARC-IC. The outlook is changing however as declining prices run into support levels that are increasing based on the past few years of higher prices. The ARC program provides a revenue guarantee tied to 86% of a benchmark revenue calculated from a five-year moving average price and a five-year moving average trend-adjusted yield. The PLC program provides support if prices fall below the higher of a legislated reference price or 85% of a five-year moving average price. With the higher prices experienced during the past few years, the five-year moving average price has increased and both ARC and PLC support levels have gotten stronger. A look at ARC and PLC protection and payment levels provides a picture of what current support and cash flow may look like and what future support could be under current or future farm legislation.

An evaluation of Congressional Budget Office's baseline projections of USDA mandatory farm and nutrition programs

AbstractThe Congressional Budget Office (CBO) projections of USDA's mandatory farm and nutrition program outlays are important in shaping US agricultural policy. Using CBO projections and observed outcomes from 1985 through 2020, we examine the degree to which projections of farm, supplemental nutrition assistance program (SNAP), and child nutrition program outlays are unbiased, efficient, and informative. We find that projections for farm and child nutrition program outlays are unbiased, SNAP outlays are unbiased at short‐term but are downward biased beyond a 3‐year horizon. All three series of projections are inefficient. SNAP and child nutrition program outlay projections are informative up to a 5‐year horizon, but the farm program outlay projections are informative for only a 1‐year horizon. Disaggregated farm program data since 2008 suggests that the uninformativeness principally stems from conservation and commodity program projections. The findings may be valuable to CBO, as they continue to improve projections, and to projection users, in adjusting their expectations.

Minimum Support Price under the Aegis of Universal Basic Income: Understanding the Implications and Way Forward: A Review

For several decades, the Indian government has established a minimum support price (MSP) program for agricultural commodities to alleviate farmers’ price risks. Concerns have been expressed regarding the MSP approach, which can potentially disrupt market integration of agricultural commodities, change pricing incentives and alter the resource allocation and production among commodities. This review article addresses the current situation of agricultural commodity support pricing, how it can be more successful and whether it can be guaranteed. Following the Indian government’s decision to repeal the three agricultural legislations, it has become increasingly clear that the MSP system needs a significant revision and that a change in discourse is must. MSP poses serious ramifications for soil health and water levels, particularly in rainfed regions that are quickly being converted to irrigated areas. A course correction is required, beginning with the demand and supply balance, while protecting farmers’ interests through remunerative prices and assistance as and when needed. In addition to the use of data-driven technologies for the digitization of land records, issuing unique farm IDs and cropping system analysis, the necessity of pricing differential schemes in India has been explored.

Directions of U.S. Farm Programmes under a Freer Trade Environment

For the new round of WTO multilateral trade liberalisation negotiations to be successful, the world will need to be more enthusiastic and flexible about opening markets. Partisans will need to submerge their self-interests, and the U.S. will need to take the initiative for more open markets. This paper makes the case that only modest changes in the U.S. domestic grain, oilseed, and cotton programmes are needed for compatibility with global free trade. The Federal Agricultural Improvement and Reform (FAIR) Act of 1996 and related policy changes in the 1990s brought fundamental reforms compatible with freer domestic and foreign markets. Chief among these were a shift from coupled deficiency payments to decoupled direct payments, an end to supply management, and less engagement of government in commodity stock accumulation and export subsidies. Converting commodity price support to recourse loans while ending all but administrative cost subsidies to crop insurance would go far to liberalise grain, oilseed, and cotton policies. Unilateral termination of commodity programmes including direct payments totalling 42 percent of net cash farm income in year 2000 would appear to be traumatic to producers. However, reduction of direct payments could be offset (for farm income) by rising farm commodity prices and receipts resulting from (1) less farm output attending lower loan rates and crop insurance subsidies, and (2) world farm commodity price-enhancement from freer global trade.

Specialty crops and the farm bill

AbstractSpecialty crops include a myriad of diverse commodities, markets, and supply chains. In contrast to major field crops, specialty crops have historically been covered by different Farm Bill provisions and other policies, in part due to their heterogeneity. As specialty crop production and markets evolve, the applicability and efficacy of alternative policy instruments change as well. We track how Farm Bill coverage of specialty crops adjusted throughout the years in broad types of policy approaches: commodity programs, trade, nutrition, research, risk mitigation, and conservation. Looking forward, we consider how specialty crops fit with current White House priorities of economy, equity, and climate as discussions begin on a new Farm Bill.

Understanding Irrigated Cotton Producer’s Crop Insurance Coverage Level Choices Under the 2014 Farm Bill

The Agricultural Act of 2014 (2014 Farm Bill) significantly changed the Title I commodity programs, and shallow loss insurance programs were added to the federal crop insurance program (Title XI). Stacked Income Protection Plan and Supplemental Coverage Option were new insurance programs enacted in the 2014 Farm Bill. Participation in these programs is influenced by premium subsidies and the type of coverage provided. Relationships between insurance agents and producers also have the potential to influence program participation. These changes could impact the producer’s insurance choice decision. The overall objective of this research is to understand the impact of the new insurance options on Texas cotton producers’ risk management decisions and participation and understand the change in coverage level of primary crop insurance due to availably of other protection. A mail survey was conducted among cotton producers in Texas to collect insurance choices data for 2014 and anticipated choices for 2015. Responses from 42% of Texas counties were received. In 2015, the USDA Risk Management Agency reported 155 counties in Texas produced cotton. Regression analysis conducted on anticipated change in coverage level of crop insurance indicated Common Crop Insurance Policy coverage level choice for larger farm size and higher non-farm income had an increase in coverage level effect; whereas enterprise unit, revenue protection, price, yield, and insurance agents had a decrease in coverage level effect. Results suggest that greater insurance agent involvement in program design and implementation of an insurance program could contribute to program success.

The Healthy Meal Program: A food insecurity screening and referral program for urban dwelling older adults.

To describe the Healthy Meal Program (HMP), a community-academic partnership that aims to address the food insecurity and social isolation in older adults living in an urban setting. Low-income older adults were screened for food insecurity and social isolation. A partnership with the food bank and a farm-based organization helped provide a weekly congregate or home-delivered meal, pilot a cooking class, and offer a mobile market selling fresh vegetables at discounted prices. Overall, 339 individuals agreed to participate in the screening process. Sixty-eight percent (n=230) screened positive for food insecurity and 41% (n=139) screened positive for social isolation. Among individuals who were food insecure, 159 were referred to a food commodity program, 31 to meals on wheels, 23 to Supplemental Nutrition Assistance Program benefits, and 28 to emergency food pantries. The mobile market served 75 participants weekly and 15 individuals took part in cooking classes. Screening for food insecurity and social isolation in the HMP helped to assess the prevalence of these social determinants of health in low-income older adults. Weekly congregate meals, home visits, and group cooking classes were initiatives taken to decrease the impact of food insecurity and social isolation in this vulnerable population.

Advances in fruit breeding in Nepal

Nepal has spent about six decades on fruit development and research in different species. Fruit breeding particularly local and exotic germplasm collection started after 1950s and has gained momentum after the formation of commodity programme in 1972 AD. Major researches in the past were focused on indigenous and exotic genotype collection, evaluation, selection, propagation protocol standardization and adoptive trials. Some good ground works have already been done in major fruits such as apple, pear, plum, persimmon, kiwifruit, citrus, litchi, guava, pomegranate, walnut, papaya, banana and mango. The major public institutions involved in fruit breeding are Nepal Agricultural Research Council (NARC) following Agriculture and Forestry University. Some of the private nurseries like Everything Organic Nursery, Kavre and Technology Demonstration Centre of ICIMOD, Lalitpur were also involved in introduction and maintenance of indigenous and exotic fruit species. National Centre for Fruit Development, Kirtipur; Tropical Region Horticulture Centre, Nawalpur; Temperate Horticulture Farm, Satbanj, and Horticulture Farm, Marpha collected many local and exotic fruits and maintained at field gene bank. Horticulture Research Station, Rajikot has introduced 25 spur type apple cultivars and maintained in field gene bank. National Citrus Research Programme, Paripatle has introduced, collected and maintained 130 genotypes including exotic and indigenous landraces of citrus. Two varieties of acid lime ‘Sunkagati-1’ and ‘Sunkagati-2’ have been released and one variety ‘Terhathum Local’ has been registered. ‘Khoku Selection’ of mandarin orange has also been registered. Banana varieties 'Malbhog', 'Willium Hybrid' and 'G9' has been selected by participatory varietal selection and registered. To strengthen fruit breeding in the nation, NARC needs to be restructured with special focus on fruit researches. Establishment of national fruit commodity programs along with establishment of Tropical Fruit Research Station in Province 2 and Temperate Fruit Research Station in Province 5 at national level can streamline NARC's fruit breeding researches.

Whole farm safety net programs: an emerging US farm policy evolution?

AbstractThe 2018 farm bill is the latest in a history that dates to 1933. Commodity assistance is the only program in all farm bills, but with evolutionary changes. Current farm commodity programs largely make payments to farms, a stark contrast to the 1930s when they limited supply, put a floor under market price, and dampened price increases via public stocks. Crop insurance, which began as an experimental pilot program in 1938, now has its own farm bill title. Almost all commodity and insurance programs have provided assistance based on a calculation specific to an individual commodity's price and/or yield. However, an evolutionary change to whole farm commodity programs may be in its infant stages. They provide assistance for variation in a farm's aggregate revenue across multiple crops. Whole farm experiments currently exist in both the commodity and crop insurance titles. Analysis of a whole farm commodity program finds that its payments differ by year from actual payments made by current commodity programs and are smaller in total.

Implications of Commodity Programs and Crop Insurance Policies for Wheat Producers

AbstractWe analyze the effects of Price Loss Coverage (PLC), Agriculture Risk Coverage (ARC), individual revenue protection insurance (RP), and Supplemental Coverage Option (SCO) on the RP coverage level, certainty equivalent, and program payments. The model is calibrated to a representative wheat farm in Mitchell County in Kansas to analyze the effects of various policies. The result highlights that when insurance is framed as an investment, cumulative prospect theory predicts farmers’ coverage decisions accurately at 70%. ARC or PLC program increases the RP coverage level to 75%, but PLC and SCO jointly decrease the RP coverage level to 70%.

AGRICULTURE IMPROVEMENT ACT OF 2018: SUMMARY AND PERSPECTIVE

The Agriculture Improvement Act of 2018, the latest US farm bill, contains no major realignment of spending across its 12 titles. Nevertheless, potentially important programmatic changes are authorized. Payments by commodity assistance programs are more closely tied to current market conditions, including allowing farms to annually change commodity program starting with the 2021 crop. Commitment to using private-public partnerships to address farm environmental issues is increased. US land conservation programs appear to be evolving to a pyramid policy approach composed of (1) conservation farming practices for land cropped annually (2) short term contracts to revitalize soil health, (3) environmental fallow to remove land from production for longer periods, and (4) long term conservation easements. The Research and Extension title had the largest percent increase in mandatory funding. Mandatory funding for US agricultural export programs were increased by double digits. Issues with provisions in multiple titles include organic production, local foods, urban agriculture, food wastes, legalization of hemp production, and programs to assist young, beginning, veteran, and socially disadvantage farmers.

An Alternative Method to Forecast Season-Average Price for U.S. Corn

Price forecasts are critical to market participants when making production and marketing decisions and to policymakers who administer commodity programs and assess the market impact of domestic or international events. With the exceptionally volatile conditions experienced in the corn market since 2006, the need for price forecasting has become even more critical. The purpose of this paper is to explore an alternative econometric procedure to forecast the season-average price of corn for U.S. producers, a relatively under-researched price forecast. The new method performs well against two widely-watched season-average price forecasts, i.e., the World Agricultural Supply and Demand Estimates and the futures-based forecasts, in particular at the beginning of the post-harvest season. Additionally, the proposed forecast performs no worse or better than the futures-based forecasts at the beginning of the forecast cycle, as well as from November to August during the marketing year. We attribute the satisfactory performance of the proposed forecast to the model’s ability to assign heterogeneous weights to futures and cash prices depending on the underlying market conditions. Furthermore, the performance of the proposed forecast tends to improve when the market becomes more volatile.

How effective are remedies in merger cases? A European and national assessment

ABSTRACTRemedies form an essential tool of any enforcement action and need to be devised with great caution from National Competition Authorities (NCAs). If the remedy is ineffective, the enforcement action does not reach the desired objective and resources will have been wasted. If the remedy is disproportionate, the decision is put at risk in a possible subsequent appeal. Remedies either behavioural or structural imposed by competition authorities seek to eliminate unilateral or/and coordinated effects as a result of the merger and restore competition on the relevant market(s) to the status quo ante. Moreover, remedy packages have typically included extensive structural divestments to remove competition concerns. The scope of this paper is to examine various issues relating to the imposition of remedies in merger cases focusing on the gas and electricity sectors (i.e. commodity and capacity release programmes, customer release schemes, network related remedies). This study relies on the energy sector with a view to developing general principles for imposing effective remedies in other sectors as well. Given the nature of competition in energy markets, particularly effective remedies are those that involve gas release programmes, the sale of price-setting generation plants, network assets, and controlling stakes in merging parties’ competitors.

Society of Behavioral Medicine position statement: increase funding for fruits and vegetables production in The Farm Bill reauthorization.

The Society of Behavioral Medicine (SBM) recommends that Congress increase funding for fruit and vegetable production and intake in The Farm Bill reauthorization. Analysis of the U.S. Department of Agriculture's databases indicates that the availability of fruits and vegetables in the food supply is at half or less than half of what is needed to meet federal dietary recommendations for Americans. Based on the extant literature, SBM supports including funding allocations for fruit and vegetable production, including fruits and vegetables in commodity programs, providing additional insurance subsidies for producing fruits and vegetables, and maintaining or increasing funding for initiatives that promote fruit and vegetable intake. To avoid some of the unintended consequences of increasing support for fruit and vegetable production, new insurance products should be developed in collaboration with groups representing fruit and vegetable producers.

The Farm Economy: Future Research and Education Priorities

AbstractResearch priorities for the U.S. farm economy include increasing the productivity and cost efficiency on current land resources while understanding production agriculture across the globe. Providing unbiased objective analysis to policymakers with regard to commodity programs, insurance markets, agricultural credit, and the production of bioenergy are important issues that directly affect not only the U.S. farm economy but other agricultural regions. The ability to manage risk, the increasing complexity of farm operations, the ability of the U.S. farm sector to be nimble to changes in individual and societal preferences, and the efficient discovery of information through efficient markets offer a wealth of research opportunities.

Commodity Program Spending on Dairy and Cotton: Past and Projected Perspective

Commodity Program Spending on Dairy and Cotton: Past and Projected Perspective

Comparing Revenue and Price Declines during Recent Multiple Year Declines

Since 1973, crop commodity programs in the farm bill have largely been transformed to policies that make payments to farmers from policies that support and increase market price. Payment was usually triggered by low price, with the goal of helping farm income during multiple years of low or depressed prices. The last two farm bills have included a policy option that makes payment triggered by low revenue using a combination of price and yield declines. By taking into account yield as well as price, revenue arguably is a more inclusive payment policy. We explore this matter further by comparing changes in price, yield per planted acre, and revenue per planted acre in the current low price environment and one from the late 1990s.

Use of the SCO and STAX Insurance Programs in 2015

SCO is intended to be available for a wide range of crops, with coverage eligibility potentially limited by the farmer’s choice of commodity program. Specifically, program crops with base acreage enrolled in either of the Agriculture Risk Coverage (ARC) programs are ineligible for SCO. Only crop base enrolled in PLC can add the SCO coverage to supplement the underlying individual insurance plan being used by the farmer. Use of SCO requires the farmer to purchase an underlying individual plan of insurance through the yield protection (YP), revenue protection (RP), or revenue protection with the harvest price exclusion (RP-HPE) plans.

Healthy-food procurement: using the public plate to reduce food insecurity and diet-related diseases

Healthy-food procurement: using the public plate to reduce food insecurity and diet-related diseases

When Tobacco Was King: Families, Farm Labor, and Federal Policy in the Piedmont by Evan P. Bennett (review)

Reviewed by: When Tobacco Was King: Families, Farm Labor, and Federal Policy in the Piedmont by Evan P. Bennett Eldred E. Prince (bio) When Tobacco Was King: Families, Farm Labor, and Federal Policy in the Piedmont. By Evan P. Bennett. (Gainesville: University Press of Florida, 2014. Pp. x, 152. $74.95 cloth) Evan Bennett has given us a well-written and thoroughly researched essay on bright leaf tobacco culture in the Old Belt of North Carolina and Virginia since the Civil War. The volume examines family labor models that developed after emancipation, stabilized under the Federal Tobacco Program introduced in the 1930s, and faded with mechanization, out-migration, and the general retreat of tobacco culture since the 1970s. Following the Civil War, freedpeople and white yeomen alike were attracted to rising tobacco prices and improving access to markets. But tobacco farming was very labor intensive, and every leaf was handled several times in the complex of tasks ending on the warehouse floor. With an eye ever on the bottom line, small farmers needed to reduce overhead any way they could. Perhaps family labor was not inevitable, as the author suggests, but it was cheap and readily available to small farmers. Spouses and children had to be housed, fed, and clothed anyway, and helping with the tobacco crop was expected as a contribution to the family’s living standard. Family labor patterns persisted into the twentieth century. Old Belt families earned the respect of their communities through their work ethic and farming skills. Indeed, family labor often ranged to other tasks such as tending a vegetable garden and caring for animals. While sharecropping and tenancy increased regionwide, especially in the cotton country, the Old Belt tobacco region was an exception. By 1920, a solid majority of tobacco growers owned the farms they worked. And this distinction was not limited to whites. Black proprietorship reached 67 percent in some Old Belt counties. One of the book’s greatest strengths is the analysis of work routines common to bright tobacco culture in the early twentieth century. The author includes not only technical descriptions of the tasks but their social aspects as well. Another important asset is the [End Page 117] excellent summary of agrarian activism in the Old Belt. Hoping to reform a biased marketing system, Old Belt tobacco growers joined successively the Grange, the Knights of Labor, the Farmers’ Alliance, and the National Farmers’ Union. With a deft hand, Bennett guides the reader through this often-confusing series of organizations and explains their successes and failures. In the chapter titled “Cooperation,” Bennett discusses the rise and fall of the Tri-State Tobacco Growers Cooperative, the most important reform movement in the tobacco country between the 1880s and the 1930s. Seeking to strengthen their inherently weak marketing position, reform-minded growers in the Carolinas and Virginia mounted a vigorous campaign to organize tobacco farmers as a counterweight to manufacturers and warehousemen. Supported by the Cooperative Extension Service and leading publications such as The Progressive Farmer, the Tri-State crossed boundaries of race and gender to an extent remarkable for the 1920s. While the Tri-State never achieved its full potential, it did raise tobacco prices for a few years. The New Deal drew a bold line across the page of southern agriculture, dividing the history of bright tobacco into “before” and “after.” Acreage allotments helped to balance supply with demand, and price supports ensured that even mediocre farmers could profit from every leaf they could urge from their allotment. After World War II, mechanical and chemical technologies increased yields, but ever larger crops threatened to overwhelm the tobacco commodity program. Quota reductions fell hardest on small farmers, hastening their exit from the culture. As tobacco farming became more capital intensive, historic family labor patterns gave way to migrant labor. By the 1980s, growing health concerns and rising leaf imports weakened domestic producers further. The final chapter, “Buyout,” discusses the endgame of the venerable tobacco commodity program in the 1990s and early 2000s. Consumer groups asked why government should continue to subsidize a commodity that posed a serious public-health hazard. Compromises such as the No-Net-Cost Act, which shifted program costs to...