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Farm Bill Outlook and the Potential Impact on Agriculture

Gain insights into the current status of the Farm Bill, its budget, and proposed adjustments in nutrition and farm policy. Understand the projected payments, agricultural productivity and usage, and the financial outlook of farmers and ranchers.

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Farm Bill Outlook and the Potential Impact on Agriculture

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  1. Farm Bill Outlook and the Potential Impact on Agriculture Urban Ag Academy Ames, Iowa July 14, 2017 Chad Hart Associate Professor/Crop Marketing Specialist chart@iastate.edu 515-294-9911

  2. Timing and Budget • Federal ag leadership hopes to pass the Farm Bill this year • Usual course of action is to avoid passage in election years • Reports of preliminary budget deal for the Farm Bill • House Ag and Budget chairpeople met in late June • But no firm numbers have been released • CBO baseline set the stage for a smaller budget • Faster Farm Bill passage = Fewer changes to current policy

  3. President’s Budget Request Source: OMB, 2018 Budget

  4. USDA’s Budget Source: USDA 2017 Budget

  5. Proposed Adjustments in Nutrition Policy Source: OMB, 2018 Budget

  6. Proposed Adjustments in Farm Policy Source: OMB, 2018 Budget

  7. Federal Crop Insurance

  8. PLC: Corn Payment Potential Reference Price = $3.70 per bushel Payment Yield = 150 bushels per acre Notes: PLC payments are made on 85% of base acres.

  9. ARC-CO: 2015 Corn Revenue Guarantee Benchmark Revenue = $851.69 per acre ARC Revenue Guarantee = $732.45 per acre Notes: Revenue Guarantee equals 86% of Benchmark.

  10. PLC pays, ARC does not Neither pay Both pay ARC pays, PLC does not

  11. Current Projected Payments Source: CBO, June 2017

  12. Mix of Projected Payments Source: CBO, June 2017

  13. Ag Productivity and Usage Using corn as an example Source: USDA

  14. Ag Prices Using corn as an example Source: USDA

  15. Net Farm Income Source: USDA

  16. Farm Debt Source: Federal Reserve

  17. Ag Economic Summary • Agricultural production and consumption has grown rapidly over the past several years. • But when production exceeds consumption, prices fall. • Crop revenues peaked in 2012-13, while livestock revenues crested in 2014-15, leading to record farm incomes. • Since then net farm income has been cut in half. • While the percentage loss in substantial, net farm income remains above levels from the early 2000’s. • Farmers and ranchers have partially compensated for the loss in income by taking on higher debt loads. • Farm and ranch balance sheets are eroding and financial stress is building for some producers, but the financial issues are not as severe as during the 1980’s. • If agricultural prices slowly improve (as projected), the squeeze on farm finances will improve as well. But for some producers, the squeeze may be too much.

  18. Iowa Corn Prices vs. Costs

  19. Thank you for your time!Any questions?My web site:http://www2.econ.iastate.edu/faculty/hart/Iowa Farm Outlook:http://www2.econ.iastate.edu/ifo/Ag Decision Maker:http://www.extension.iastate.edu/agdm/

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