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

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APCA Policy Description Reserve Specifications for 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

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Page 1: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Farmer-OwnedFarmer-OwnedReserve StudyReserve Study

2011 NFU Fall Fly-InWashington D.C.

September 12, 2011

Daryll E. RayAgricultural Policy Analysis Center

University of Tennessee Institute of Agriculture

Page 2: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPPCCAA

Policy DescriptionPolicy DescriptionObjectives –Bulk of revenue from market receipts–Reduce government payments while

maintaining farm income–Reduce price volatility

Page 3: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPPCCAA

Policy DescriptionPolicy DescriptionReserve 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

Page 4: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Price Band for CornPrice Band for CornUsed in Farmer-Owned Reserve Study

Page 5: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPPCCAA

Policy DescriptionPolicy DescriptionReserve 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

Page 6: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

8 Crops - Government Payments8 Crops - Government Payments

Historic Baseline

Reserve Policies

$ Billion

Page 7: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

8 Crops – Government Payments8 Crops – Government PaymentsAverage Per Year Over Each Period

Historic Baseline

Reserve Polices

$ Billion

$14.8

$4.8

$6.8

$3.6

$11.7

$4.3

Page 8: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Corn PricesCorn Prices

Historic Baseline

Page 9: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Corn PricesCorn Prices

Historic Baseline

Reserve Policies

Page 10: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Corn PricesCorn PricesAverage Per Year Over Each Period

Historic Baseline

Reserve Policies

$2.05

$2.68

$4.02$3.71

$2.81$3.07

Page 11: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Corn Exports - QuantityCorn Exports - Quantity

Historic Baseline

FOR Policies

Million Bu.

Page 12: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Corn Exports - ValueCorn Exports - Value

Historic Baseline

Reserve Policies

$ Billion

Page 13: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Corn Value of ExportsCorn Value of ExportsAverage Per Year Over Each Period

Historic Baseline

Reserve Policies

$ Billion

$3.9

$4.8

$8.3$7.7

$5.6$5.9

Page 14: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Reserves - QuantityReserves - Quantity

Corn

Wheat

Million Bu.

Soybeans

Page 15: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Corn – Value of Production plus Corn – Value of Production plus Government PaymentsGovernment Payments

Average Per Year Over Each Period

Historic Baseline

Reserve Policies

$ Billion

$26.4$28.2

$51.5

$46.5

$36.1 $35.2

Page 16: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPP CCAA

Realized Net Farm IncomeRealized Net Farm IncomeAverage Per Year Over Each Period

Historic Baseline

Reserve Policies

$ Billion

$49.8 $50.8$55.8

$51.5 $52.1 $51.1

Page 17: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

AAPPCCAA

Summary of FindingsSummary of FindingsOver 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

Page 18: APCA Farmer-Owned Reserve Study 2011 NFU Fall Fly-In Washington D.C. September 12, 2011 Daryll E. Ray Agricultural Policy Analysis Center University of

Agricultural Policy Analysis Center The University of Tennessee 310 Morgan Hall 2621 Morgan Circle Knoxville, TN 37996-4519

www.agpolicy.org

Thank YouThank You


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