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Farmer-Owned Reserve Study

Farmer-Owned Reserve Study. Daryll E. Ray Agricultural Policy Analysis Center University of Tennessee Institute of Agriculture. 2011 NFU Fall Fly-In Washington D.C. September 12, 2011. Policy Description. Objectives Bulk of revenue from market receipts

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Farmer-Owned Reserve Study

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  1. Farmer-OwnedReserve Study Daryll E. Ray Agricultural Policy Analysis Center University of Tennessee Institute of Agriculture 2011 NFU Fall Fly-In Washington D.C. September 12, 2011

  2. Policy Description Objectives • Bulk of revenue from market receipts • Reduce government payments while maintaining farm income • Reduce price volatility

  3. Policy Description Reserve Specifications for 1998-2010 Study Period • Initial corn loan rate set at midpoint between variable and full cost of production • Indexed with a prices paid by farmers index • Other crop loan rates set to historic ratios with corn • Release price is set at 160% of loan rate

  4. Price Band for CornUsed in Farmer-Owned Reserve Study Release Price Loan Rate

  5. Policy Description Reserve Specifications for 1998-2010 Study Period • Reserve maximums • Corn – 3 billion bushels • Wheat – 800 million bushels • Soybeans – 400 million bushels • Farmer storage payment rate 40¢/bu./yr • Set-aside available if needed • Eliminate Direct Payments, LDPs, & CCPs

  6. 8 Crops - Government Payments $ Billion Historic Baseline Reserve Policies

  7. 8 Crops – Government PaymentsAverage Per Year Over Each Period $ Billion Historic Baseline $14.8 Reserve Polices $11.7 $6.8 $4.8 $4.3 $3.6

  8. Corn Prices Release Price Historic Baseline Loan Rate

  9. Corn Prices Release Price Reserve Policies Historic Baseline Loan Rate

  10. Corn PricesAverage Per Year Over Each Period $4.02 Reserve Policies $3.71 Historic Baseline $3.07 $2.81 $2.68 $2.05

  11. Corn Exports - Quantity Million Bu. Historic Baseline FOR Policies

  12. Corn Exports - Value $ Billion Reserve Policies Historic Baseline

  13. Corn Value of ExportsAverage Per Year Over Each Period $ Billion Reserve Policies $8.3 $7.7 Historic Baseline $5.9 $5.6 $4.8 $3.9

  14. Reserves - Quantity Million Bu. Corn Wheat Soybeans

  15. Corn – Value of Production plus Government PaymentsAverage Per Year Over Each Period $ Billion Reserve Policies $51.5 $46.5 Historic Baseline $35.2 $36.1 $28.2 $26.4

  16. Realized Net Farm IncomeAverage Per Year Over Each Period $ Billion Historic Baseline Reserve Policies $55.8 $51.1 $50.8 $51.5 $49.8 $52.1

  17. Summary of Findings Over the Study Period, 1998-2010, with Reserves in Place: • Government payments 60% lower • Increased crop prices and increased reliance on market receipts • Value of exports $4.9 billion higher • Lower price volatility benefitting: • Consumers • Crop farmers • Livestock producers and industrial users

  18. Thank You

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