Associate Professor/Crop Markets Specialist U.S. Farm Policy Ames, Iowa August 12, 2013 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

Farm Bill Titles Commodities IX. Energy Conservation X. Hort. & Organic Ag. Trade XI. Livestock Nutrition XII. Crop Insurance Credit XIII. Commodity Futures Rural Development XIV. Miscellaneous Research XV. Trade & Taxes Forestry

Farm Bill Projected Spending 2008-2013 $297 Billion

Direct Payment Rates Crop Unit 2008-12 Corn $/bu. 0.28 Soybeans 0.44 Barley 0.24 Wheat 0.52 Oats 0.024 Cotton $/lb. 0.0667 Sorghum 0.35

Countercyclical Payments

Loan Rates Crop Unit 2008-09 2010-12 Corn $/bu. 1.95 Soybeans 5.00 Barley 1.85 Wheat 2.75 2.94 Oats 1.33 1.39 Cotton $/lb. 0.52 Sorghum

Ideas on the Next Farm Bill Let’s look at the common features from the House and Senate bills Both versions of the farm bill eliminate direct payments, countercyclical payments, ACRE, and SURE The marketing loan program would continue Livestock disaster programs would be reestablished

Reference Prices Senate: 55% of 5-yr Olympic average MYA price House: Set by law Corn $3.70 Wheat $5.50 Soybean $8.40 Corn $2.95 Wheat $3.62 Soybean $6.29

ARC or RLC instead of ACRE Revenue-based support program Revenues based on 5-year Olympic averages for yields and prices Yields and prices have cups (T-yields and reference prices)

ARC Set-up for Corn in 2013 Yield per Planted Acre Year Farm (bu./acre) County Season-Average Price ($/bu.) 2008 160 4.06 2009 175 3.55 2010 164 5.18 2011 163 6.20 2012 165 5.00 Olympic Average 4.75 So the farm and county yields would be 164 bushels per acre and the ACR price would be $4.75 per bushel.

AMP or PLC instead of CCP Price-based support program Reference prices establish targets Works like CCP Payment rate = Max(0, Reference price – Max(MYA price, Loan rate))

Dairy Dairy Producer Margin Protection Program Voluntary margin coverage, with the opportunity for supplemental coverage Dairy Market Stabilization Program Managed supplies when margins fall Packages are very similar across the House and Senate versions

Yield Insurance Payout Graph No Payout Payout

RPHPE Payout Graph No Payout Payout

RP Payout Graph No Payment Neither Pay RPHPE Pays YP Pays Both Pay RP Pays

SCO Examples from Last Year’s Bills Source: Congressional Research Service

Thank you for your time. Any questions. My web site: http://www. econ Thank you for your time! Any questions? My web site: http://www.econ.iastate.edu/~chart/ Iowa Farm Outlook: http://www.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/