Analysis of Commodity Program Adjustments for U.S. Rice in Stochastic Framework
AbstractPotential adjustments in U.S. commodity program for rice are evaluated in this paper using stochastic analysis in a global modeling framework. Corresponding threshold and loss-compensatory increases in target price and loan rates are determined with assumed outright and gradual elimination of direct payments. Results show that if direct payments (DP) are eliminated in 2012, a 23% increase in both the target price (TP) and loan rate (LR) triggers counter-cyclical payments (CCP) 80% of the time; and it will take an increase of 48% in TP and LR to generate CCP enough to compensate for the loss in total DP. If DP is gradually removed over 5 years, the trigger and compensatory increases in TP and LR are 41% and 46%, respectively. Furthermore, if DP is eliminated outright and TP maintained, an increase of 71% in LR triggers loan deficiency payments (LDP) 75% of the time; and it will take an increase of 130% in LR to generate enough LDP to recoup the total loss in DP. Under gradual removal of DP, the trigger and compensatory increases in LR are 71% and 92%, respectively.
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Bibliographic InfoPaper provided by University of Arkansas, Department of Agricultural Economics and Agribusiness in its series Staff Papers with number 119754.
Date of creation: Jan 2012
Date of revision:
U.S. commodity program; threshold and loss-compensatory increases; stochastic analysis; Agricultural and Food Policy; Crop Production/Industries; Q18;
Find related papers by JEL classification:
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
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