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• W2165196227 abstract "The 1996 Farm Bill, now known as the FAIR (Federal Agricultural Improvementand Reform) Act of 1996, has been portrayed as reforming U.S. agricultural policy.Gone are set aside and base acreage controls over farm planting decisions. Gone,too, are deficiency payment programs that provided protection against downwardprice movements for producers of program commodities. According to conventionalwisdom, the FAIR Act provides an environment in which farmers enjoy greaterproduction flexibility, but face much more risk.In fact, careful examination of the FAIR Act innovations leads to the conclusion thatno radical changes have been made in food and feed grain agricultural policies, andthat it is unlikely that the FAIR Act will cause large changes in crop acreages.The framework for the agricultural price and income support programs of the 1980sand 1990s was established by the 1973 Agriculture and Consumer Protection Act.The key elements for wheat, barley, and rice were target prices and deficiencypayments and price supports for each crop through nonrecourse loan programs.In contrast, the FAIR Act creates a much simpler system of transfer payments forfood grain and feed grain producers. Nonrecourse loan programs remain, butvariable deficiency payments are replaced by fixed market transition payments forthe period 1996 to 2002. For each program crop, producers receive payments of 85percent of their 1996 crop acreage base multiplied by their 1995 program cropyields. Producers can plant any crops (other than fruits and vegetables) on their land(unless it is CRP land). This paper discusses the following aspects of the farmprogram:Decoupling: Most links at the farm level between current production decisions andcurrent or future deficiency payments were severed by the provisions of the 1985 Actwhich froze program yields at 1985 levels. The FAIR Act can therefore be viewedas simply completing a decoupling process between deficiency payments andproduction decisions, by ending the system that actually required farmers to plantprogram crops on base acres to receive government transfer payments.Elimination of acreage reduction programs: By the 1990s the role of ARPs incontrolling supplies had diminished for wheat and feed grains, partly because of the1988 and 1989 droughts which reduced inventories, and partly because of higherprices associated with the advent of the CRP and land retirement through the 0-92program. Their abolition in 1996 has therefore had little effect on the farm decisionmaking environment.About the AuthorsVincent H. SmithMontana StateUniversity-BozemanVincent H. Smith is an AssociateProfessor of Economics in the Depart-ment of Agricultural Economics andEconomics and a Senior ResearchFellow at the Trade Research Center.Dr. Smith has published widely inagricultural economics and eco-nomics journals on agricultural trade,policy, environmental, and healthissues. In addition, he has authoredor coauthored three books onagricultural policy, technologicalchange, and medical technology. In1995, he received the WesternAgricultural Economics AssociationAnnual Award for Outstanding Re-search.Joseph W. GlauberU.S. Department ofAgricultureDr. Glauber is the Deputy ChiefEconomist with the USDA. Prior tohis current position, he was seniorstaff economist for agriculture, natu-ral resources, and trade at thePresident™s Council of EconomicAdvisers from 1991-1992.Dr. Glauber is the author of numerousstudies on crop insurance anddisaster policy, and his work on areayield futures and options contractswas instrumental in the developmentand approval of yield futures andoptions contracts." @default.
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• W2165196227 date "1997-01-01" @default.
• W2165196227 modified "2023-09-27" @default.
• W2165196227 title "The Effects of the 1996 Farm Bill on Feed and Food Grains" @default.
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