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An Overview of the U.S. Agricultural Economy and the 2008 Farm Bill

Published online by Cambridge University Press:  15 September 2016

Joy Harwood
Joy Harwood*
Affiliation:
Farm Service Agency, U.S. Department of Agriculture, in Washington, D.C.
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Abstract

The 2008 farm bill involved 16 months of debate. The end product is similar to the 2002 farm bill in the crops arena, continuing counter-cyclical payments, direct payments, and marketing assistance loans. In addition, however, the 2008 bill adds a new, optional counter-cyclical revenue program (Average Crop Revenue Election, or ACRE), authorizes a new permanent disaster program, and contains various other changes. The new ACRE program provides an entirely new set of dimensions for producers to consider in deciding whether to opt into the program, including the multi-year trade-off between the loss of potential “traditional” payments and the revenue protection provided by ACRE, as well as the producer's own expectations about yield and price trends and variability. The payment calculation associated with the new permanent disaster program appears at first glance to be relatively simple, although the whole-farm nature of the program and the number of variables makes it quite complex.

Keywords

farm billfarm programsACREpermanent disaster assistanceregulatory process
Type
Invited Papers
Information
Agricultural and Resource Economics Review , Volume 38 , Issue 1 , April 2009 , pp. 8 - 17
Copyright
Copyright © 2009 Northeastern Agricultural and Resource Economics Association 

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References

1 As of January 1, 2007, the majority party in the House had not been in power for 12 years, and the Senate had a bare majority in one party.Google Scholar

2 Any increases in revenues had to be initiated and approved by the House Ways and Means Committee and the Senate Finance Committee.Google Scholar

3 The $605 billion excludes $167 billion in spending for child nutrition programs; it is excluded due to categorization by CBO based on Congressional jurisdiction.Google Scholar

4 Direct payments are based on historical acreage and yields and fixed payment rates, and do not vary by year or depend on market conditions. Counter-cyclical payments, in contrast, are based on historical plantings and yields, but the payment rate depends on year-specific market prices. Marketing assistance loans provide short-term financing for producers and have the potential to result in marketing loan benefits, which are based on current production and year-specific prices.Google Scholar

5 The poundage limit is 2.4 million pounds per operation for FY 2008, increasing to 2.985 million pounds for each fiscal year 10/1/08 to 8/31/12, and declining to 2.4 million pounds on 9/1/12. The 2.4 million pound limit is the equivalent of approximately 120 cows; the 2.985 million pound limit is about 145 cows.Google Scholar

6 For the 1/1/08–8/31/12 period, the $16.94 used to determine the payment amount is adjusted upward by 45 percent of the difference between the “National Average Dairy Feed Ration Cost” and $7.35 per cwt. For 9/1/12 forward, the feed adjustment trigger is $9.50 per cwt.Google Scholar

7 For rice, the reporting lag is the longest of any of the crops. The season average price for 2009 would not be known until January 2011.Google Scholar