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Analysis of Commodity Program Adjustments for U.S. Rice in Stochastic Framework


  • Chavez, Eddie C.
  • Wailes, Eric J.


Potential 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.

Suggested Citation

  • Chavez, Eddie C. & Wailes, Eric J., 2012. "Analysis of Commodity Program Adjustments for U.S. Rice in Stochastic Framework," Staff Papers 119754, University of Arkansas, Department of Agricultural Economics and Agribusiness.
  • Handle: RePEc:ags:uarksp:119754

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    References listed on IDEAS

    1. Caswell, Margriet & Fuglie, Keith O. & Ingram, Cassandra & Jans, Sharon & Kascak, Catherine, 2001. "Adoption of Agricultural Production Practices: Lessons Learned from the U.S. Department of Agriculture Area Studies Project," Agricultural Economics Reports 33985, United States Department of Agriculture, Economic Research Service.
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    More about this item


    U.S. commodity program; threshold and loss-compensatory increases; stochastic analysis; Agricultural and Food Policy; Crop Production/Industries; Q18;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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