Looking Back, Looking Forward ISU EO ANR In-Service Ames, Iowa Apr. 3, 2014 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

Crop Prices Drought Exports Recession Ethanol

Crops Livestock 3 3

Crop Prices

Farm Bill: Old vs. New Direct Payments (DP) Countercyclical Payments (CCP) Marketing Loans (LDP) Revenue Countercyclical Payments (ACRE) Countercyclical Payments (PLC) Marketing Loans (LDP) Revenue Countercyclical Payments (ARC) New programs, but they have strong similarities to previous programs

PLC: Price Protection

ARC: Revenue Protection

Producer Choice The red line is the ARC-County payment trigger. ARC payments are triggered when the combination of price and yield is below and to the left of the red line.

Summary Strong production and slowing growth in demand have crop prices weakening. Crop margins are projected to be at or below zero for the next few years. Production and price risk management is crucial. The new farm bill provides tools for risk management, but producers will have some tough choices to make.