Economic Conditions & the Title 1 Programs

Transcription

1 Economic Conditions & the Title 1 Programs By Mykel Taylor Kansas State University mtaylor@ksu.edu and AgManager.info Current Economic Conditions

2 Returns to Farming Source: KFMA Enterprise Reports ( Returns to Farming Source: KFMA Enterprise Reports (

3 Returns to Farming Returns over Total Costs ($/ac) NC KFMA Enterprise Analysis Wheat Corn Grain Sorghum Soybeans 150 Source: KFMA Enterprise Reports ( Returns to Farming Returns over Total Costs ($/ac) NC KFMA Enterprise Analysis Wheat Corn Grain Sorghum Soybeans 150 Source: KFMA Enterprise Reports (

4 Net Farm and Ranch Income Net Income Per Operator Returns over Total Costs ($/ac) $180,000 $130,000 $80,000 $30,000 Dryland Crop Cowherd $(20,000) Average Net Farm Income $110,000 $90,000 $70,000 ($/ac) $50,000 $30,000 $10,000 $(10,000)

5 Farm Family Living Expenses $80,000 Total Family Living Expenses $70,385 annual $60,000 $40,000 $20,000 Bankruptcies Filed by KS Farms No. of Bankruptcies Filed

6 Bankruptcies Filed by KS Farms Farm Bill Issues

7 Realities of the Next Farm Bill Are the existing programs working as intended? Declining revenue floor of the ARC-CO program NASS versus RMA datasets SCO versus buy-up of crop insurance Federal funds are limited Addition of cotton and adjustments to dairy Changing the PLC reference prices 39 programs without baseline specialty crops, nutrition Objectives by Roberts and Marshall Certainty, predictability in a new farm economy Push to expand current cap of 24 million acres of CRP Regulatory reform Changes that will reduce costs to farmers Farm Bill for all commodities and regions Cotton, dairy Continuing a strong crop insurance program

8 Feedback from Federal FB Hearings Strengthen and improve commodity programs Consider alternative yield datasets NASS vs RMA, averages across neighboring counties Maintaining or increasing reference prices Timing of payments Oct 1 is a budget gimmick Historical base acres Another voluntary reallocation Proposal for a mandatory reallocation (ties to production and may not be WTO compliant) Issues To Be Aware Of Changes to the programs can be costly CBO scoring will dictate if some changes are made Payment limits Actively engaged Grassley proposal Combined across the Titles President s proposal

9 Some Questions for You What program did you enter your wheat acres in? A. ARC-CO B. PLC C. ARC-Individual 0% 0% 0% ARC-CO PLC ARC-Individual

10 If you could do it all over, what program would you enroll your wheat acres in? A. ARC-CO B. PLC C. ARC-Individual 0% 0% 0% ARC-CO PLC ARC-Individual Are you generally satisfied with your enrollment options? A. Yes B. No 0% 0% Yes No

11 If Congress makes cuts to the Farm Bill, where would you prefer to see them? A. Title I (ARC, PLC) B. Conservation Title C. Crop Insurance Title 0% 0% 0% Title I (ARC, PLC) Conservation Title Crop Insurance Title PLC and ARC-CO Enrollments

12 Nebraska Program Enrollment Crop ARC-CO ARC-IC PLC Wheat 44% 1% 55% Corn 96% 0% 4% Soybeans 97% 1% 2% Grain Sorghum 57% 0% 43% PLC Payouts

13 Payments for PLC $7.00 Wheat PLC $1.80 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 RP: $5.50 Final PLC Payment Rate Stautory Reference Price Final MYA Price $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 Payments for PLC $3.80 $3.70 $3.60 $3.50 $3.40 $3.30 $3.20 Corn PLC RP: $3.70 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $3.10 Final PLC Payment Rate Stautory Reference Price Final MYA Price

14 Payments for PLC $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 Grain Sorghum PLC RP: $3.95 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 Final PLC Payment Rate Stautory Reference Price Final MYA Price Payments for PLC $12.00 Soybeans PLC $1.00 $10.00 $8.00 $6.00 $4.00 $2.00 RP: $8.40 Final PLC Payment Rate Stautory Reference Price Final MYA Price $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10

15 PLC vs ARC-CO Saunders County PLC vs ARC-CO $70.00 Wheat Saunders $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Cnty Avg Payout ARC CO Cnty Avg Payout PLC

16 PLC vs ARC-CO $70.00 Corn Saunders $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Cnty Avg Payout ARC CO Cnty Avg Payout PLC PLC vs ARC-CO $ $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Grain Sorghum Saunders Cnty Avg Payout ARC CO Cnty Avg Payout PLC

17 PLC vs ARC-CO $3.50 Soybeans Saunders $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 Cnty Avg Payout ARC CO Cnty Avg Payout PLC PLC vs ARC-CO Adams County

18 PLC vs ARC-CO $70.00 Wheat Adams $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Cnty Avg Payout ARC CO Cnty Avg Payout PLC PLC vs ARC-CO $90.00 Corn Adams $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Cnty Avg Payout ARC CO Cnty Avg Payout PLC

19 PLC vs ARC-CO $ $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Grain Sorghum Adams Cnty Avg Payout ARC CO Cnty Avg Payout PLC PLC vs ARC-CO $70.00 Soybeans Adams $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 Cnty Avg Payout ARC CO Cnty Avg Payout PLC

20 Implications Implications Picking the best program was and will continue to be a crap shoot Have to predict where prices will be relative to reference prices Have to anticipate what yields will be at the county level Timing of payments PLC payments were more timely relative to overall farm profitability

21 Implications If history is our guide We will pick PLC Exposed to a bad crop/high price outcome (1989, 2012) Depend more heavily on crop insurance-hpo Questions? By Mykel Taylor Kansas State University mtaylor@ksu.edu and AgManager.info