An assessment of the equitability of farm program payments

Date

2006-08-16

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Publisher

Texas A&M University

Abstract

With increased pressures on today??s Federal Budget, there may be funding cuts on agriculture programs. These cuts would certainly bring about increased concern as to which programs and which crops take the biggest cut. A straight cut across the board will likely affect each commodity group uniquely, thus creating a need to evaluate the current distribution of funding and the relative benefits associated with this distribution. The equitable distribution of farm program payments has been an ongoing concern and publications have been written attempting to answer the question of which commodity is receiving more than their ??fair share.?? This thesis will use the measures used in prior publications that have been updated to reflect current farm bill visions. Additionally, this research uses a consistent data set over a long enough time period so that comparisons between program crops can be made. Equitability in relation to farm program payments is extremely difficult to measure as there are so many different factors to take into consideration. Thus, it would be expected that the answer does not resolve itself with one ratio. Ultimately, the results of this research show that depending upon which tool you choose, the relative levels of support may change. For example, rice receives the most support per pound of program production on average, relative to the other eight crops, yet receives the second lowest level of target price relative to total variable costs. The underlying causes for this variability of results are described in the research though investigation of trends in the market prices for these specific crops and the understanding of what each ratio is actually measuring. By reviewing the results, a clearer picture of which crops are getting greatest support begins to emerge, yet the outcome is still subject to much debate as there is no single ??tell-all?? ratio. The whole picture needs to be taken into consideration. This research provides a reference and attempts to present the whole picture, providing a consistent and complete reference for policy makers to refer to as this debate increases.

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