A1260943526fMwiR

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Agricultural Extension Service The University of
Tennessee

• View From the Trenches
• Farm Level Impacts of the Farm Bill
• Tennessee Row Crop Perspective
• Chuck Danehower
• Area Specialist - Farm Management

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Decisions, Decisions, Decisions

• Option of updating base acres and yields
• Confusion reigns
• 98-01 worst production years in recent history
• Producers need help in making decisions
• Timing of payments may affect cash flow
• First year most critical
• May be new opportunities for conservation program
  participation
• Payment limits may affect decisions
• Sign-up decisions made under risk
• Farmers will have more marketing decisions to
  make, not less

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To Update Or Not To Update

• Tradeoffs, primarily because entire farm must be
  updated, not selected commodities
• Updating often adds income for one commodity at
  the expense of another
• Decision is extremely farm-specific

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Estimating Impact

• University of Tennessee Cotton and Field Crop
  Budgets No Till .
• Finpack Computer Program.
• Used throughout Tennessee U.S.
• Free service and information confidential.
• Assist farmers in developing farm financial
  plans. Evaluates alternatives on the farm.
• Contact local County Extension office or call
  1-800-345-0561 MANAGEment information
  line.

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Assumptions

• 2000 acre farm.
• Cotton Grains Grains
• Cotton 800 acres -
• Soybeans 700 acres 1000 acres
• Corn 500 acres 500 acres
• Wheat - 500 acres
• DC Soybeans - 500 acres
• Land Cost.
• 25 of production and govt payments.
• Debt to Asset Ratio.
• 48.

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Yields and Prices

• Yields
• Cotton 650 lbs.
• Corn . 115 bu.
• Soybeans 35 bu.
• DC Soybeans 30 bu.
• Wheat 50 bu.
• Prices Loan rates-1996
  2002 Current
• Cotton .52 lb. .52 lb.
  .52 lb.
• Corn 2.07 bu. 2.13 bu.
  2.70 bu.
• Soybeans 5.46 bu. 5.21 bu. 5.75 bu.
• Wheat 2.69 bu. 2.61 bu. 2.85 bu.

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TN Cotton Grain Example
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TN Grain Example
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TN Cotton Grain ExampleCurrent Prices
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TN Cotton Grain ExampleCurrent Prices- No MLA
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TN Grain ExampleCurrent Prices MLA, No CCP
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TN Grain ExampleCurrent Prices No MLA, No CCP
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Revenue Received ExamplesLoan, DP, CCP
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Revenue Received ExamplesCurrent Prices
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Revenue Received ExamplesPrice Low at Harvest
then Increases
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Summary Observations

• FSRIA 2002 increases income
• Greater increase in cotton than grains
• Risk to producers in harvest sales then market
  rising, reducing CCP
• Production still king, if you dont produce it
  cant sell it.
• Crop insurance and disaster assistance cant make
  it all up.

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Educational Opportunities

• Signup decisions likely economic consequences
  of signup options
• Marketing tools futures, options, forward
  pricing, etc .
• Farm planning and management more important than
  ever.