Background on U.S. Agricultural Policy: Food Security Objectives and Trade Implications
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1 Background on U.S. Agricultural Policy: Food Security Objectives and Trade Implications Workshop Post Bali Agricultural and Trade Policy Options: Focus on China 23 October 2014
2 Agenda Background on U.S. Agriculture U.S. Policy Development Key Elements of Current Farm Policy U.S. Policies in Context
3 Background on U.S. Agriculture 3.2 million farm operators 87% of farms are operated by families or individuals 2.7 million hired farm workers 13.9 million ag related jobs Crop Acreage: 132 million hectares Value of Agricultural Production: $363 billion 5% of farms account for 50% of production Net Farm Income: $130 billion 2013 data, USDA/ERS
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11 U.S. Farm Policy Evolution 1930s: Price supports and supply control 1960s: introduction of income support payments 1980s: marketing and production flexibility 1990s: decoupling from production U.S. agriculture workers as share of workforce
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13 U.S. Farm Policy and Food Security Price supports and stockholding, failed policies of the past Current approach: consumer income support and investment in farm productivity market responsiveness to meet foreign and domestic demand
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15 Nutrition Programs Growth in Nutrition Programs School Breakfast Child and adult care Source: USDA, Food and Nutrition Service. Other WIC National School Lunch SNAP
16 U.S. Ag Exports and Imports 2013 U.S. ag production and trade follows comparative advantages, across and within sectors 5 0 Oilseeds & Products Billion$ Wheat Tree Nuts Fruit Corn Dairy Vegetables Cotton Beef Misc Hort Poultry Pork Rice Sugar/confec Cocoa/choc Wine Tobacco Coffee Beer Rubber U.S. Exports U.S. Imports Source: USDA/FAS/GATS FATUS categories. CY data.
17 Key Elements of Farm Policy Farm Programs have evolved over time Farm Bill Elements Risk management for commodities Income support for producers Other programs Key Issues in Farm Policy Decoupling payments from farmer decisions Coupling payments to environmental requirements Focusing payments on farmers in need
18 1. Commodities 2. Conservation 3. Trade 4. Nutrition 5. Credit 6. Rural Development 7. Research 8. Forestry 9. Energy 10. Specialty Crops 11. Crop Insurance 12. Miscellaneous Farm Bill Titles
19 Price Based Programs Price Loss Coverage (PLC) paid on historical base Payments when prices fall below fixed targets. Payments made on basis of historical production, not current production. Target prices around cost of production, significant payments currently not considered likely Marketing assistance loans paid on output Farmers can forfeit commodity loans on crops when prices fall below a fixed loan rate (or just receive a payment and market the crop directly) Loan rates very low, few forfeitures forecast as of now Covered commodities: wheat corn grain sorghum barley dry peas oats rice soybeans peanuts other oilseeds lentils small chickpeas honey wool mohair cotton (marketing loan and STAX only)
20 Revenue Based Programs Agriculture Risk Coverage (ARC) paid on historical base payments when prices falls below recent levels. Payments made on basis of historical production, not current production or farm individual farm revenue. county or individual option Supplemental Coverage Option (SCO) paid on county averages payments based on county level revenue. insurance program with premium subsidies Stacked Income Protection Plan (STAX) paid on county averages for upland cotton producers only insurance program with premium subsidies
21 Insurance and Disaster Programs Crop insurance programs Crop revenue and yield programs multiple policy types Premium subsidies to encourage participation Disaster assistance programs Noninsured Crop Disaster Assistance Program (NAP) weather related loss coverage for crops for which crop insurance policies not available Tree Assistance Program (NAP) coverage for losses to orchard and nursery trees, bushes, and vines from natural disasters
22 Insurance and Disaster Programs Margin Protection Program (MPP) for dairy Margin insurance paid on historical production levels Base coverage with option to purchase higher levels Lower subsidies for higher production Livestock disaster assistance Livestock Forage Assistance (LFP) Livestock Indemnity Program (LIP) Emergency Assistance for Livestock, Honeybees, and Farm raised Fish Program (ELAP)
23 Other Programs Conservation Nutrition Research Pest and disease control Other
24 U.S. Farm Programs in Context: Cash Receipts $ billion Crop cash receipts Farm related income Livestock cash receipts Government payments Source: UDSA/ERS
25 OECD Producer Support Estimate for Select Countries USD Billions (20) China EU USA Indonesia Turkey Russia Brazil Source: OECD
26 2013 Applied Administered Prices U.S. Dollars per Metric Ton Rice Wheat Maize Source: national statistics in line with WTO notifications (except for Thailand) Note: India reported aggregate course grain reference price that includes corn and barley; United States
27 All Non Green Box Support Notified to the WTO USD Billions India European Union United States China Russia Brazil Source: WTO notifications
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