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Revenue-Based Income Safety Nets

Revenue-Based Income Safety Nets. Chad Hart Center for Agricultural and Rural Development Iowa State University February 27, 2007 Iowa Farm Bureau Policy Information Conference West Des Moines, Iowa E-mail: chart@iastate.edu. Current Farm Support.

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Revenue-Based Income Safety Nets

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  1. Revenue-Based Income Safety Nets Chad Hart Center for Agricultural and Rural Development Iowa State University February 27, 2007 Iowa Farm Bureau Policy Information Conference West Des Moines, Iowa E-mail:chart@iastate.edu

  2. Current Farm Support • Either fixed (direct payments) or price-based (counter-cyclical and marketing loan) • Critics point out 3 major issues: • Marketing loan program’s WTO standing • Continuing need for disaster assistance • Potential for overcompensation

  3. Revenue-based Farm Support • Has the potential to address all 3 concerns • Basic structure: Payment = Max(0, Target Revenue – Actual Revenue) • Payments could be triggered by low prices or low yields

  4. Revenue-based Issues • Complexity comes from defining revenues • Yields (farm, county, state, or national?) • Prices (government-based or market-based?) • Complexity comes from defining acreage • Planted acres versus base acres • Complexity comes from interaction with other farm programs • Crop insurance

  5. Different Payment Triggers

  6. Cost Changes with Area

  7. Cost Changes with Coverage Level

  8. Cost Changes with Price Level

  9. Gaining Some Support • National Corn Growers Association • American Farmland Trust • The current Administration farm bill proposal • But each has their own version of revenue-based support

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