1996 farm bill titles iagricultural market transition act subtitle atitle, purpose, and definitions...
TRANSCRIPT
1996 Farm Bill1996 Farm BillTitles
I Agricultural Market Transition ActSubtitle A Title, Purpose, and Definitions
B Production Flexibility Contracts C Nonrecourse Marketing Assistance Loans
and Loan Deficiency Payments D Other Commodities
- Dairy, Peanuts, Sugar E Administration F Permanent Price Support Authority G Commission on 21st Century Prod. Ag. H Miscellaneous Commodity Provisions
II Agricultural TradeIII ConservationIV Nutrition AssistanceV Agricultural PromotionVI CreditVII Rural DevelopmentVIII Research, Extension, and EducationIX Miscellaneous Major shift from coupled
(deficiency payments) to decoupled support (AMTA/PFC payments)
Decoupled payments were referred to as AMTA and PFC payments
• Federal Agriculture Improvement and Reform Act of 1996
• Generally referred to as “Freedom to Farm”• As with other farm bills, 1996 farm bill was an
amendment to permanent legislation (1949 farm bill)
• 7 year farm bill beginning in 1996 and ending in 2002
• Major change in commodity programs relative to previous 22 years (starting with 1973 farm bill)–
–
OverviewOverview
• Eliminated Target Prices–
• Eliminated• Eliminated
Commodity ProvisionsCommodity Provisions
• Initiated decoupled payments–
• Provided full planting flexibility on previous crop acreage bases– –
Commodity ProvisionsCommodity Provisions
• Continued nonrecourse marketing assistance loans and loan deficiency payments –
–
–
Commodity ProvisionsCommodity Provisions
Contract Payments by Fiscal Contract Payments by Fiscal YearYear
(million $)1996 1997 1998 1999 2000 2001 2002 Total
5,570 5,385 5,800 5,603 5,130 4,130 4,008 35,626
Allocation of Payments by Crop
Crop Percent Corn 46.22 Grain sorghum 5.11 Barley 2.16 Oats 0.15 Wheat 26.26 Upland cotton 11.63 Rice 8.47 TOTAL 100.00
• Fixed payments$40,000
• Marketing loan gainsor Loan Deficiency Payments$75,000– Can use marketing certificates
• Continues 3-entity rule
Payment LimitationsPayment Limitations
1996 Farm Bill 1996 Farm Bill (Debated in (Debated in ’95)’95)
High prices in ’93, ’94 and part of ‘95
World recession
2 weeks after signed ’96 Bill prices started falling
S
D
TPP
LR
Direct PaymentDirect Payment
Direct Payment
AMTA: Ag Market Transition Act
AMTA = Payment Rate * Base * Pay Yield * .85
1995 Outlook Reality 1996
Peq
qseq
S
D1
Loan rate Peq
qs
S
D reduced by world recession
Marketing Loan rate
Loan rate was to be a safety net
1996 Farm Bill Removed 1996 Farm Bill Removed ARPARP
No more ARP, kept the CRP, released land back to production
Full capacity, freedom to plant “any” crop
P1
P2
Pexp
Q exp
TD
Q
S with ARP
S with no ARP
q2
ARP => 10% idling of base acres is required to qualify for TP & loan benefits.
1996 Farm Bill Removed 1996 Farm Bill Removed TPTP
Target Price: Congress set TP & provided for a Deficiency Pmt.
D
P
Peq1
qs
TP
S after ARP
A
Q/yr
No production incentive from the target priceProduction declines, price rises
Peq2
Practice QuizPractice Quiz
1. List and describe the purpose of three policy tools used in the 1990 farm bill.
2. Evaluate this statement. “The U.S. went from a nonrecourse loan to a marketing loan program to save money.”