[Image: field shot from the air]The new federal farm bill passed recently by Congress has increased the level of complexity faced by farmers.
Known as the Food, Conservation and Energy Act of 2008, this new farm bill is a five-year measure that covers 2008 through 2012. The 2008 measure makes some changes in existing farm program provisions and gives farmers new options in receiving price and income support.
Dr. Mike Salassi, an LSU AgCenter agricultural economist, is conducting research and developing farm decision tools to help farmers decipher the implications of this new farm program on the financial aspects of their farming operations.
Included under this research project is development of spreadsheet-based decision tools that farmers can use to evaluate the impact of farm program options on their farming operations.
Salassi said the tools will allow a farmer to gather information related to the farming operation and compare farm returns under the two basic farm program options.
One option is the continuation of the income support program from the 2002 farm bill, including direct, counter-cyclical and loan deficiency payments. But the 2008 farm bill has included an alternative option, referred to as the Average Crop Revenue Election (ACRE) program.
Under the new option, price support payments are based on a comparison of current-year crop revenue per acre with the historical average. Selection o[Image: kim frey farm from the air]f this option, as an alternative to counter-cyclical payments, requires a 20 percent reduction in direct payments and a 30 percent reduction in marketing assistance loan rates. State-level and farm-level income triggers must be met before any payments under this new program option can be issued.
Choosing which farm program option is best for a particular farming operation is not very straightforward, and Salassi’s research is trying to identify the resulting farm financial differences under various economic and production situations.
Others areas of research under way in this project include:
Evaluation of alternative rice rental arrangements and how the recent increases in prices of production inputs influence both grower and landlord returns under various arrangements.
Estimation of irrigation costs from both well and surface water sources powered by diesel and electric power units, as well as identifying potential cost savings from switching to electric power sources.
Farm-level analysis of farm program, crop insurance and production options on overall farm financial performance. –Bruce Schultz
Checkoff funds for this project: $40,000