A A P P C C A A The State of Tennessee and U.S. The State of Tennessee and U.S. Crop Agriculture as the New Crop Agriculture as the New Farm Bill Approaches Farm Bill Approaches Daryll E. Ray University of Tennessee Agricultural Policy Analysis Center Soybean Promotion Board Pigeon Forge, TN January 18, 2006
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APCA The State of Tennessee and U.S. Crop Agriculture as the New Farm Bill Approaches Daryll E. Ray University of Tennessee Agricultural Policy Analysis.
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AAPPCCAA
The State of Tennessee and U.S. The State of Tennessee and U.S. Crop Agriculture as the New Farm Bill Crop Agriculture as the New Farm Bill
ApproachesApproaches
Daryll E. RayUniversity of Tennessee
Agricultural Policy Analysis Center
Soybean Promotion BoardPigeon Forge, TN January 18, 2006
• Anticipation of normal crop in Argentina and Brazil
• Expect sub-$5.50 beans with normal crop
AAPPCCAA
Acreage Next YearAcreage Next Year
• Likely increase in soybean acreage
– High cost of production for corn and cotton
– High fertilizer costs
– Less concern about Asian Soybean Rust
AAPPCCAA
Farm ProgramsFarm Programs• Where will US farm policy be
determined?– Washington?
– Geneva?
• Farm program possibilities– Farmers content with current program
– WTO influences• More conservation/environment
• Revenue insurance/risk mitigation
AAPPCCAA
Agriculture Has Chronic Price and Income Problems Agriculture Has Chronic Price and Income Problems Because It Does Not Self-Correct QuicklyBecause It Does Not Self-Correct Quickly
The Logic is Straight ForwardThe Logic is Straight Forward • Technology expands output faster than population
and exports expand demand
• Market failure: lower prices do not solve the problem
• Little self-correction on the demand side
– People will pay almost anything when food is short
– Low prices do not induce people to eat more
• Little self-correction on the supply side
– Farmers tend to produce on all their acreage
– Few alternate uses for most cropland
AAPPCCAA
Agricultural Policy Analysis Center The University of Tennessee 310 Morgan Hall 2621 Morgan Circle Knoxville, TN 37996-4519
www.agpolicy.org
Thank YouThank You
AAPPCCAA
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Weekly Policy ColumnWeekly Policy Column
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
4.45.6
1.32.2
7.74.6
10.2
4.92.2
3.4
4.4
10.9
28.5
30.9
14.7
18.1
7.4
16.228.5
21.6
10.147.39.3
1.8
4.8
47.328.6
32.7
38.9
24.9
31.6
32.2
49.1
15.0
28.213.7
19.6
6.8
29.3
4.3
6.4
16.6 25.1
77.270.1
12.6
23.0
Government Payments as a Percentage of Net Farm Income
1990
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
3.63.7
1.00.9
2.14.7
9.0
5.22.0
2.2
4.0
12.3
25.3
49.6
19.0
13.1
6.6
22.393.8
12.3
6.041.95.7
1.6
7.1
61.525.1
35.7
43.0
21.6
30.3
39.4
59.0
13.0
28.914.1
13.5
5.4
34.9
5.8
7.3
16.6 37.4
98.951.5
16.6
20.6
Government Payments as a Percentage of Net Farm Income
1991
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
3.23.4
1.22.9
5.13.6
7.6
4.82.5
3.1
3.9
8.6
28.8
24.6
16.0
16.2
5.5
14.627.3
18.3
10.339.510.8
1.8
6.0
51.630.1
28.3
32.9
19.1
24.3
25.3
32.8
11.8
24.812.0
14.3
10.9
24.2
8.0
17.4
16.7 33.8
40.153.2
14.7
14.5
Government Payments as a Percentage of Net Farm Income
1992
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
5.32.9
1.52.4
3.14.7
12.2
8.2 5.7
5.0
7.6
6.8
45.0
52
40.2
23.0
8.3
28.942.9
29.0
14.873.612.7
4.4
14.1
73.831.4
57.7
80.5
40.1
42.4
31.9
48.0
13.3
25.011.3
14.9
14.1
137.8
8.4
5.7
14.1 953.5
78.937.6
13.9
13.8
Government Payments as a Percentage of Net Farm Income
1993
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
4.23.5
1.33.2
2.73.8
8.4
4.74.2
2.5
4.5
5.8
32.5
13.0
22.6
11.8
4.4
9.615.0
11.1
6.526.87.6
2.4
10.4
28.220.3
19.8
31.3
15.5
21.9
19.8
24.8
12.3
27.914.2
30.4
14.6
23.6
4.3
7.1
12.4 46.3
43.656.3
17.2
12.7
Government Payments as a Percentage of Net Farm Income
1994
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
5.44.5
1.72.1
2.36.9
11.9
7.03.7
1.5
3.9
9.4
24.7
65.0
23.6
7.7
8.1
16.048.8
8.5
3.618.26.1
2.7
15.4
24.720.5
25.6
62.1
30.5
31.3
42.8
42.5
15.8
29.614.7
26.9
1.2
34.1
4.7
8.3
11.8 60.0
55.146.8
11.3
11.2
Government Payments as a Percentage of Net Farm Income
1995
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
4.42.9
1.51.0
1.23.5
7.6
4.23.8
2.3
4.3
12.3
26
14.1
12.1
14.2
5.9
11.214.7
8.5
5.516.87.2
1.1
3.8
21.425.3
16.9
21.5
11.2
13.7
50.3
26.5
15.1
21.410.3
26.2
7.0
11.5
4.7
4.2
12.3 16.7
26.667.6
11.6
9
Government Payments as a Percentage of Net Farm Income
1996
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
5.23.3
1.40.8
2.15.4
21.8
7.26.2
2.7
5.9
24.4
30.8
25.0
20.8
13.9
6.5
9.919.4
8.5
5.516.56.1
0.8
6.9
25.017.5
14.5
21.3
22.5
23.1
24.9
30.2
7.4
24.99.0
10.2
6.3
18.7
3.3
4.2
9.5 49.6
109.776.1
16.1
14.9
Government Payments as a Percentage of Net Farm Income
1997
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
17.820.0
9.813.1
8.113.4
29.8
21.916.1
13.5
21.545.5
105.8
123.0
78.7
55.2
26.2
49.1
105.8
25.5
18.658.614.2
2.1
7.5
88.142.0
55.8
87.0
100.6
56.9
42.6
114.9
16.3
46.915.6
25.5
15.0
97.5
12.3
3.9
36.0 113.3
117.8174.3
28.0
35.3
Government Payments as a Percentage of Net Farm Income
2000
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
10.96.0
5.018.5
7.79.8
15.3
19.710.5
9.7
19.815.6
102.0
117.9
36.3
40.1
23.3
50.280.3
18.6
17.147.414.6
4.4
5.0
80.437.9
47.6
74.7
70.1
58.3
38.8
83.4
12.2
25.910.8
22.6
10.0
86.3
12.2
5.0
27.5 132.9
127.1118.6
18.4
41.8
Government Payments as a Percentage of Net Farm Income
2001
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
34.475.1
12.217.8
5.822.9
74.2
21.17.0
20.9
40.5127.0
57.1
85.1
34.9
53.5
26.9
40.776.5
34.2
35.864.524.3
3.8
22.0
105.221.1
50.5
67.9
66.3
76.3
25.4
136.3
16.4
31.627.8
81.2
5.5
38.3
7.8
15.7
18.4 67.1
80.9151.5
16.7
23.5
Government Payments as a Percentage of Net Farm Income
2002
Less than 24.9%
25.0% - 49.9%
50.0% - 74.9%
75.0% - 99.99%
100% and Above
AAPPCCAA
Government Payments as a Government Payments as a Percent of Net Farm IncomePercent of Net Farm Income
19.131.4
10.320.0
7.815.5
29.2
14.86.8
23.7
37.673.8
34.4
51.3
29.8
51.1
22.4
3436.5
19.3
22.758.414.2
6.5
10.4
58.431.5
44.8
49.9
25.9
33.9
29.3
41.2
18.0
37.721.4
27.0
15.4
52.1
9.7
13.4
14.5 46.7
42.774.3
18.2
17.3
Government Payments as a Percentage of Net Farm Income