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Farmer-Owned Reserve Study. Daryll E. Ray Agricultural Policy Analysis Center University of Tennessee Institute of Agriculture. 2011 NFU Fall Fly-In Washington D.C. September 12, 2011. Policy Description. Objectives Bulk of revenue from market receipts

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Farmer owned reserve study

Farmer-OwnedReserve Study

Daryll E. Ray

Agricultural Policy Analysis Center

University of Tennessee Institute of Agriculture

2011 NFU Fall Fly-In

Washington D.C.

September 12, 2011


Policy description
Policy Description

Objectives

  • Bulk of revenue from market receipts

  • Reduce government payments while maintaining farm income

  • Reduce price volatility


Policy description1
Policy Description

Reserve 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


Price band for corn used in farmer owned reserve study
Price Band for CornUsed in Farmer-Owned Reserve Study

Release Price

Loan Rate


Policy description2
Policy Description

Reserve 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


8 crops government payments
8 Crops - Government Payments

$ Billion

Historic Baseline

Reserve Policies


8 crops government payments average per year over each period
8 Crops – Government PaymentsAverage Per Year Over Each Period

$ Billion

Historic

Baseline

$14.8

Reserve Polices

$11.7

$6.8

$4.8

$4.3

$3.6


Corn prices
Corn Prices

Release Price

Historic Baseline

Loan Rate


Corn prices1
Corn Prices

Release Price

Reserve Policies

Historic Baseline

Loan Rate


Corn prices average per year over each period
Corn PricesAverage Per Year Over Each Period

$4.02

Reserve Policies

$3.71

Historic

Baseline

$3.07

$2.81

$2.68

$2.05


Corn exports quantity
Corn Exports - Quantity

Million Bu.

Historic Baseline

FOR Policies


Corn exports value
Corn Exports - Value

$ Billion

Reserve Policies

Historic Baseline


Corn value of exports average per year over each period
Corn Value of ExportsAverage Per Year Over Each Period

$ Billion

Reserve Policies

$8.3

$7.7

Historic

Baseline

$5.9

$5.6

$4.8

$3.9


Reserves quantity
Reserves - Quantity

Million Bu.

Corn

Wheat

Soybeans


Corn value of production plus government payments average per year over each period
Corn – Value of Production plus Government PaymentsAverage Per Year Over Each Period

$ Billion

Reserve Policies

$51.5

$46.5

Historic

Baseline

$35.2

$36.1

$28.2

$26.4


Realized net farm income average per year over each period
Realized Net Farm IncomeAverage Per Year Over Each Period

$ Billion

Historic

Baseline

Reserve Policies

$55.8

$51.1

$50.8

$51.5

$49.8

$52.1


Summary of findings
Summary of Findings

Over 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



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