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

2. Federal Agriculture Improvement & Reform Act (FAIR) of 1996
7-years ( )
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 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
SUMMARY