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THE 1996 FARM ACT

THE 1996 FARM ACT. AGEC 4703 Lesson 5b Larry D. Sanders Fall 2005. Federal Agriculture Improvement & Reform Act (FAIR) of 1996. 7-years (1996-2002) Phasedown govt. support w/fixed payments Eliminates Target Prices & Deficiency Payments Acreage Reduction Program

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THE 1996 FARM ACT

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  1. THE 1996 FARM ACT AGEC 4703 Lesson 5b Larry D. Sanders Fall 2005

  2. Federal Agriculture Improvement & Reform Act (FAIR) of 1996 • 7-years (1996-2002) • Phasedown govt. support w/fixed payments • Eliminates • Target Prices & Deficiency Payments • Acreage Reduction Program • Mandatory Crop Insurance • Establishes Market Transition Payments

  3. FAIR (cont.) • Increases Planting Flex • Phasedown milk support price to $9.90 in 1999; replace w/recourse loan in 2000 • Cap CRP at 36.4 mil.ac.; EQIP, other programs approved • Fund for Rural America • Food Stamp/Nutrition reauthorized for 2 yrs

  4. FAIR: Commodity Provisions • Increases Planting Flex • Planting of any crop on “contract “ acres except fruits & vegetables (mung beans, lentils, dry beans are ok) • Haying & Grazing permitted, including alfalfa • Conservation compliance required • Establishes Market Transition Payments • Retains marketing loan • Reduce payment limit to $40,000

  5. FAIR: Peanut Provisions • Price Support: Quota $610/ton Additional $132/ton • National Quota Level: • 1.35 mil. tons minimum eliminated • 1996 Crop level--1.1 mil. tons • Eliminates Undermarketings • Transfer of Quota, Sale, Lease Authority Expanded • Transfer across county lines grows from 15% (‘96) to 40% (‘00)

  6. FAIR: Rural Development • Fund for Rural America ($300 mil.) • Financial Assistance for Telemedicine & Distance Learning • Water/Waste Facility Loans/Grants • Community Advancement & Leadership Program Established

  7. FAIR: Environmental Provisions • Conservation Reserve Program (CRP) maintained at 36.4 mil. ac. • New enrollments permitted with rental rates at fair market value • Early Out permitted w/restrictions • Wetlands Reserve Program (WRP) capped at 975,000 ac. • New Enrollments: • 1/3 Permanent Easements • 1/3 30-year/less Easements • 1/3 Wetland Restoration w/cost-share

  8. FAIR: Environmental Provisions • Environmental Quality Incentive Program (EQIP) • Cost share, Incentive payments & technical assistance; 5-10 yr. plan • Moderate/small livestock producers ($100 mil.) • Combines ACP, GPCP, WQIP, Colorado Salinity Program ($100 mil.)

  9. FAIR: Environmental Provisions • Conservation Farm Option (CFO) • Pilot Program for producers w/PFCs • Develop & implement 10-15 yr. plan • In exchange for CFO payments, producers forego participation in/payments under CRP, WRP, EQIP • Payment equivalent to foregone payment plus PFC payment

  10. FAIR: Cotton Provisions • Loan Rates: • Minimum $0.50; Maximum $0.5192 • May repay at: • smaller of established loan rate plus interest, or • prevailing world price, adjusted to US quality/location • 10-mo. loans • Recourse loans for seed cotton

  11. OKLAHOMA IMPACTS--Projected • TOTAL NET FARM INCOME ($ million) 1017 948 901 906 739 ACTUAL: 96: $558 97: $943 98:$767 99: $1108 00: $1145

  12. OKLAHOMA IMPACTS--Projected AVERAGE LAND VALUE ($/ag ac)

  13. Federal Direct Government Outlays, 1992-2011f ($bil) $ billion

  14. SUMMARY • 7 yrs. to efficency for Crop Producers? 2002: No • 4 yrs. for Dairy Producers? 2002: No; on hold • Near total flexibility 2002: Yes; very popular • More volatility in Feed Price & Supply 2002: Yes • Continued support for export markets 2002: Yes, but questionable support

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