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A Consideration of the Devolution of Federal Agricultural Policy Diverse needs and preferences across the United States provide justification for the devolution, or decentralization, of many Federal Government programs to the State or local level. The move toward devolution, however, has not been evidenced in U.S. agricultural policy, despite significant differences across States in such areas as commodity production, production costs, income distribution, and opportunities for off-farm work. The existing structure of USDA funding and program delivery already reflects an appreciation of the gains from devolution, with some programs accommodating differences in State and regional preferences. This report considers the implications of devolving $22 billion in 2003 budget outlays, mostly for domestic commodity and natural resource programs and rural development and housing programs. ERSAER836 23 pp 11/3/2004 10:30:00 AM 23.00 A Safety Net for Farm Households Discussions in the public arena have raised fundamental questions about the ultimate goals of farm policy and the need for establishing a safety net for farm households. This report examines four scenarios for government assistance to agriculture based on the concept of ensuring some minimum standard of living. Lower income farmers would benefit relatively more from the safety net scenarios, while farmers producing selected commodities benefit relatively more from current farm programs. Farm households in the Northern Crescent, the Eastern Uplands, the Southern Seaboard, and the Fruitful Rim all would generally receive a higher level and a greater proportion of benefits than under current programs. A clear understanding of objectives and intended beneficiaries must be the starting point for discussions of future farm policy. ERSAER788 44 pp 12/6/2000 12:00:00 PM 25.50 A Temporal Comparison of Sources of Variability in Farm Household Income An ERS Elsewhere file of a journal article published in Agricultural Finance Review. eejs0214 3/1/2002 Agri-Environmental Policy at the Crossroads: Guideposts on a Changing Landscape Agri-environmental policy is at a crossroads. Over the past 20 years, a wide range of policies addressing the environmental implications of agricultural production have been implemented at the Federal level. Those policies have played an important role in reducing soil erosion, protecting and restoring wetlands, and creating wildlife habitat. However, emerging agri-environmental issues, evolution of farm income support policies, and limits imposed by trade agreements may point toward a rethinking of agri-environmental policy. This report identifies the types of policy tools available and the design features that have improved the effectiveness of current programs. It provides an indepth analysis of one policy tool that may be an important component of a future policy package—agri-environmental payments. The analysis focuses on issues and tradeoffs that policymakers would face in designing a program of agri-environmental payments. ersaer794 72 pp 1/25/2001 3:00:00 PM 27.00 Agricultural Income and Finance Outlook - September 2001 Current financial forecasts indicate U.S. net cash farm income could reach $60.8 billion this year, eclipsing 1993's previous record. Crop prices have recovered somewhat from last year and the livestock sector is particularly strong. Sector wealth continues to increase. New land-value data show farm asset values rising faster than farm debt, resulting in 2001 farm equity up almost $31 billion from last year. For commodities, low crop prices have not been enough to offset higher input costs so returns to crops are still down. For livestock, higher market prices are offsetting lower feed prices resulting in improvement in the bottom lines of livestock producers. This electronic report describes the situation and outlook for farm business, farm household, and sector income, and provides analysis of farm assets, farm debt, and cost of production. Includes extensive appendix tables. ERSAIS77 11/1/2001 Agricultural Resources and Environmental Indicators, 2003 This report identifies trends in land, water, and biological resources and commercial input use, reports on the condition of natural resources used in the agricultural sector, and describes and assesses public policies that affect conservation and environmental quality in agriculture. Combining data and information, this report examines the complex connections among farming practices, conservation, and the environment, which are increasingly important components in U.S. agriculture and farm policy. The report also examines the economic factors that affect resource use and estimates costs and benefits to farmers, consumers, and the government of meeting conservation and environmental goals. The report takes stock of how natural resources (land, water and biological resources) and commercial inputs (nutrients, pesticides, seed and machinery) are used in the agricultural sector; shows how they contribute to environmental quality; and links use and quality to technological change, production practices, and farm programs. The report is available only in electronic format. Back to AREI home. ERSAH722 2/14/2003 9:00:00 AM Agriculture Economy Improves in 2003 The financial condition of U.S. farmers and other agricultural stakeholders is expected to improve in 2003. 10/15/2003 Amber Waves, February 2003 Amber Waves is a new magazine that presents a window into the broad scope of ERS' research and analysis. The magazine covers the economics of agriculture, food and nutrition, the food industry, trade, rural America, and farm-related environmental topics. Available on the Internet and in print, it will appear five times a year (in February, April, June, September, and November). The Internet edition or ""e-zine"" will change as new material is added between scheduled issues. 2/20/2003 12:31:00 PM 49.95/year Amber Waves, June 2004 Amber Waves presents the broad scope of ERS' research and analysis. The magazine covers the economics of agriculture, food and nutrition, the food industry, trade, rural America, and farm-related environmental topics. Available on the Internet and in print, Amber Waves is issued in print five times a year (February, April, June, September, and November). The Internet edition, or "e-zine," includes links to web-only resources. 6/1/2004 1:00:00 PM 49.95/year Amber Waves, November 2004 Amber Waves presents the broad scope of ERS's research and analysis. The magazine covers the economics of agriculture, food and nutrition, the food industry, trade, rural America, and farm-related environmental topics. Available on the Internet and in print, Amber Waves is issued in print five times a year (February, April, June, September, and November). The Internet edition, or "eZine," includes links to web-only resources. 11/3/2004 10:15:00 AM 49.95/year Contracts, Markets, and Prices: Organizing the Production and Use of Agricultural Commodities Production and marketing contracts govern 36 percent of the value of U.S. agricultural production, up from 12 percent in 1969. Contracts are now the primary method of handling sales of many livestock commodities, including milk, hogs, and broilers, and of major crops such as sugar beets, fruit, and processing tomatoes. Use of contracts is closely related to farm size; farms with $1 million or more in sales have nearly half their production under contract. For producers, contracting can reduce income risks of price and production variability, ensure market access, and provide higher returns for providing differentiated farm products. For processors and other buyers, vertical coordination through contracting is a way to ensure the flow of products and to obtain differentiated products, ensure traceability for health concerns, and guarantee certain methods of production. The traditional spot market—though it still governs nearly 60 percent of the value of agricultural production—has difficulty providing accurate price signals for products geared to new consumer demands, like produce raised and certified as organic or for identity-preserved crops modified for special attributes. We are likely to see a continuing shift to more explicit forms of vertical coordination, through contracts and processor ownership, as a means to ensure more consistent product quantity and quality. ERSAER837 81 pp 11/3/2004 10:30:00 AM 29.50 Decoupled Payments in a Changing Policy Setting This report analyzes the U.S. experience with decoupled payments in the Production Flexibility Contracts program from 1996 to 2002. The studies in this report consider the effects of decoupled payments on recipient households, and assess land, labor, risk management, and capital market conditions that can lead to links between decoupled payments and production choices. Each study contributes a different perspective to understanding the response of U.S. farm households and production to decoupled income transfers. ERSAER838 66 pp 11/3/2004 10:30:00 AM 27.00 Decoupled Payments: Household Income Transfers in Contemporary U.S. Agriculture Decoupled payments are lump-sum income transfers to farm operators that do not depend on current production, factor use, or commodity prices. Such payments are not currently constrained by global trade rules, but many countries argue that they distort production and trade and that their use should be limited. This report examines the U.S. experience with decoupled payments in its Production Flexibility Contracts program under the Federal Agriculture Improvement and Reform (FAIR) Act of 1996. The payments have improved the well-being of recipient farm households, enabling them to comfortably increase spending, savings, investments, and leisure but with minimal distortion of U.S. agricultural production and trade. However, farm operators may retain as little as 40 percent of program benefits due to higher land rents. While commercial farms received the largest share of decoupled payments, they rent in over two-thirds of their program acres, which suggests that a sizable portion of their program benefits may be passed through to nonfarming landowners. ERSAER822 33 pp 2/19/2003 10:00:00 AM 25.50 Devolution of Farm Programs Could Broaden States' Role in Ag Policy U.S. farms vary greatly in size, specialty, and household characteristics. U.S. regions differ markedly in natural resource endowments. And States themselves are widely divergent in terms of their preferences as to how funds from agricultural programs should be spent. Given this diversity, can the delivery of agricultural programs be better tailored to distinct State and local circumstances? Devolution, or the transfer to States of Federal funds and/or control of those funds, is one way of adapting national policies to suit local preferences more closely and of recognizing that program delivery costs can vary geographically. 11/3/2004 10:16:00 AM Economic Assessment of the 1999 Drought: Agricultural Impacts Are Severe Locally, but Limited Nationally While the 1999 drought has had severe financial impacts on agricultural producers in the drought regions, its impact on U.S. agricultural production has been limited. The drought will reduce commodity receipts relative to 1998 by an estimated $1.29 billion. Estimated farm net income losses, including expected yield losses, increases in expenses, and insurance indemnities, will total $1.35 billion, about 3 percent of expected 1999 U.S. net farm income. Drought impacts in areas of the Northeast designated as extreme and severe drought are expected to reduce farmers' net income by nearly $840 million. The regions affected, the crops grown in those regions, the increased use of irrigation, and crop insurance coverage limited the drought's impacts on agriculture nationally. Drought also affects the rural population by reducing water supplies available for human and livestock consumption. ERSAIB755 20 pp 11/1/1999 23.00 ERS Farm Typology for a Diverse Agricultural Sector The Economic Research Service (ERS) developed a farm typology which categorizes farms into more homogeneous groups than do classifications based on sales volume alone, producing a more effective policy development tool. The typpology is used to describe U.S. farms. ERSAIB759 8 pp 9/1/2000 12:00:00 PM 12.00 Farm Payments: Decoupled Payments Increase Households' Well-Being, Not Production This article analyzes the U.S. experience with decoupled farm payments -- those not tied to production or prices -- from 1996 to 2002. The payments, made under the Production Flexibility Contracts program, affected farm household well-being -- defined to encompass consumption, savings, investment, and labor/leisure choices. 2/20/2003 12:30:00 PM Financial Performance of U.S. Commercial Farms, 1991-94 This report focuses on the 27 percent of farms, approximately 500,000, with annual gross sales of at least $50,000, farms typically considered commercial-size operations. These farms produce just over 75 percent of the value of agricultural products, and vary greatly by size, commodities produced, financial status, and operator demographics. Overall financial performance shows that the proportion of farms experiencing extreme financial stress remained stable over the last few years, and is considerably less than in the 1980's. ERSAER751 144 pp 6/1/1997 36.00 Have Conservation Compliance Incentives Reduced Soil Erosion? With the 1985 Food Security Act, farmers are required to engage in conservation activities in order to receive government payments. This article focuses on the soil erosion impacts of "conservation compliance", which requires producers to apply and maintain conservation systems on highly erodible (HEL) cropland that was already in crop production in 1985 or risk losing government farm price and income support. The article finds that following implementation of conservation compliance and other conservation policy changes, soil erosion on U.S. cropland fell significantly. 6/1/2004 1:00:00 PM How Does Structural Change in the Global Soybean Market Affect the U.S. Price? South American soybean production, combined with the U.S. soybean stocks-to-use ratio, provides a strong basis for forecasting U.S. soybean prices. South American soybean production accounts for much of the global structural change that has altered the relationships among U.S. soybean production, use, stocks, and price. The article estimates that a 1-percent increase in South American soybean production decreases U.S. soybean prices by about one-quarter percent. ERSOCS04D01 10 pp 4/13/2004 3:00:00 PM 12.00 Income, Wealth, and the Economic Well-Being of Farm Households Agricultural policy is rooted in the 1930's notion that providing transfers of money to the farm sector translates into increased economic well-being of farm families. This report shows that neither change in income for the farm sector nor for any particular group of farm business can be presumed to reflect changes confronting farm households. Farm households draw income from various sources, including off-farm work, other businesses operated and, increasingly, nonfarm investments. Likewise, focus on a single indicator of well-being, such as income, overlooks other indicators such as the wealth held by the household and the level of consumption expenditures for health care, food, housing, and other items. Using an expanded definition of economic well-being, we show that farm households as a whole are better off than the average U.S. household, but that 6 percent remain economically disadvantaged. ERSAER812 77 pp 7/29/2002 12:30:00 PM 29.50 Production and Price Impacts of U.S. Crop Insurance Programs The analysis suggests that subsidized crop insurance leads to relatively small increases in crop production. At the aggregate level, crop insurance subsidies lead to production to riskier regions. EEJS0303 7/9/2003 Provisions of the Federal Agriculture Improvement and Reform Act of 1996 This report provides an item-by-item description and explanation of the new Act, which will guide agricultural programs from 1996-2000. Signed into law in April, the act makes significant changes in long-standing U.S. agricultural policies. Major changes in U.S. commodity programs are included in the Act's Title I, known as the Agricultural Market Transition Act. ERSAIB729 164 pp 9/1/1996 41.00 Stability of Farm Income and the Role of Nonfarm Income in U.S. Agriculture An ERS Elsewhere file of a journal article published in Review of Agricultural Economics. This research examines the stability of farm household income over time and the role of off-farm work in stabilizing farm household incomes. EEJS0220 9/1/2002 Structural and Financial Characteristics of U.S. Farms, 1993: 18th Annual Family Farm Report to Congress In 1993, the 2.1 million farms in the contiguous United States operated an average of 436 acres and produced an average of $73,700 in agricultural products, as measured by gross sales. Characteristics of individual farms--including their level of production--varied widely, however. Most production occurred on relatively few commercial farms. Commercial farms (sales of $50,000 or more) were only 27 percent of U.S. farms, but accounted for about 90 percent of sales. Households with noncommercial farms (sales less than $50,000) relied on off-farm sources for virtually all of their income. U.S. farms are diverse, and variation within the industry is hidden by U.S. averages. ERSAIB728 112 pp 1/17/1997 33.00 The 1996 Farm Act Increases Market Orientation The Federal Agriculture Improvement and Reform Act of 1996, a milestone in U.S. agricultural policy, provides new farm sector law for 1996-2002, fundamentally redesigning income support programs and discontinuing supply management programs for producers of many commodities. This bulletin provides a general overview of major changes related to production agriculture resulting from the commodity provisions, agricultural trade provisions, and conservation provisions of the Act. ERSAIB726 36 pp 8/1/1996 25.50 The 2002 Farm Act: Provisions and Implications for Commodity Markets The Farm Security and Rural Investment Act of 2002 (2002 Farm Act), which governs agricultural programs through 2007, was signed into law in May 2002. This report presents an initial evaluation of the new legislation's effects on agricultural commodity markets, based on sectorwide model simulations under alternative policy assumptions. The analysis shows that loan rate changes under the marketing assistance loan program of the 2002 Farm Act initially result in an increase in total planted acreage of eight major program crops. This increase in plantings, however, is relatively small (less than 1 percent), partly due to the inelasticity of acreage response in the sector. In the longer run, the simulations indicate that overall plantings of the eight program crops studied are lower under the 2002 Farm Act than under a continuation of the 1996 Farm Act. This result mostly reflects larger enrollment in the Conservation Reserve Program and increased plantings of dry peas and lentils, although planted acreage for the eight program crops is reduced by less than 0.6 percent. The effects of the 2002 Farm Act on the livestock sector and retail food prices are relatively small. Farm income is increased, mostly due to higher government payments to the sector under the new law. ERSAIB778 67 pp 11/19/2002 12:00:00 PM 27.00 The Dynamics of Wealth Concentration Among Farm Operator Households An ERS Elsewhere file of a journal article published in Agricultural and Resource Economics Review. eejs0219 7/1/2002 Tobacco and the Economy: Farms, Jobs, and Communities Public health policies intended to reduce the incidence of smoking-related disease adversely affect thousands of tobacco farmers, manufacturers, and other businesses that produce, distribute, and sell tobacco products. This report assesses the likely impacts of declining tobacco demand, and identifies the types of workers, farms, businesses, and communities that are most vulnerable to loss of tobacco income and jobs. The dollar impact on the farm sector of a reduction in cigarette demand will be smaller than that experienced by manufacturing, wholesale, retail, and transportation businesses, but tobacco farms and their communities may have the most difficulty adjusting. Many tobacco farmers lack good alternatives to tobacco, and they have tobacco-specific equipment, buildings, and experience. Most communities will make the transition to a smaller tobacco industry with little difficulty, because tobacco accounts for a small share of the local economy. However, a number of counties depend on tobacco for a significant share of local income. ERSAER789 44 pp 9/15/2000 25.50 Understanding Rural America The diversity of rural America and the changes it has undergone in the last half century have resulted in a wide variety of economic conditions and needs. This full-color report documents changes in rural employment, population, and well-being for six categories of rural counties: those that depend on farming, manufacturing, and services, and those that have high concentrations of retirees, Federal lands, and poverty. ERSAIB710 36 pp 2/1/1995 25.50