Estimates of Minnesota Farm-Level Crop Commodity Payments under New House Framework

The objective of this study is to compare commodity payments under current Federal farm policy with the previous Senate and Administration proposals and the recently released “2008 Farm Bill Conference: House Agriculture Committee-Developed Concept for a Farm Bill Spending Framework.” Projections of crop revenue and government payments are made using historical yield data for each example farm, the county, and the nation; historical price data; and statistical distributions and relationships of these yields and prices. Using 2007 FAPRI price projections (which are closer to the prices expected in the next few years when a new farm bill will be in force), expected Total Government Payments (TGP) are almost entirely attributed to the fixed direct payments under all these proposals. Since commodity prices are so far above their “target levels” the possibility of a counter cyclical price or revenue payment or a loan deficiency payment is highly unlikely. TGP under the alternative policies follows a similar pattern on the example corn and soybean farms and a slightly different but fairly consistent pattern for the example wheat and soybean farms. For the corn and soybean example farms in southern Minnesota, the HB-RCCP and USDA proposals generate very similar levels of TGPs compared to current policy. HB-RCCP provides a slightly higher expected TGP than CP for all example farms except for one and higher TGP than USDA for all farms. ACR is estimated to provide lower TGP for all example corn and soybean farms. For the example wheat and soybean farms in northwest Minnesota, the results are mixed. Compared to the other three proposals, ACR provides higher TGP for 2 of the 6 example farms. Each of the proposals does reduce risk as measured by CV. We note ACR is not quite as efficient at risk reduction except for two wheat/soybean farms in northwest Minnesota.