Agricultural Marketing Policy Papers

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Marketing Assistance Loans, Loan Deficiency Payments and Marketing Loan Gains for Minor Oilseed and Pulse Crops
(MSU Extension, 2003-11) Johnson, James B.
Marketing assistance loans are available to Montana producers of minor oilseed and pulse crops. The USDA differentiates county-level loan rates from national rates for minor oilseeds and dry peas. County-level lentil and small chickpea loan rates for all pertinent counties throughout the United States are differentiated at the multi-state, regional level from the national loan rates. For each of the pulse crops-- dry peas, lentils, and small chickpeas the county-level loan rates are the same in all Montana counties. Loan deficiency payments are available on all or a portion of harvested production when posted-county prices for a loan commodity are below county-level loan rates. Similarly, marketing loan gains are available when posted-county prices are less than county loan rates at the time marketing assistance loans are settled.
The Canadian Wheat Board: Government Guarantees and Hidden Subsidies
(MSU Extension, 2004-07) Goodloe, Carol
The operations of the Canadian Wheat Board (CWB), a state trading enterprise, have generated controversy over the years, partly because of an alleged lack of transparency in its operations. This study examines one aspect of operations that is not well understood – the government guarantee of CWB borrowing and export credit sales. The CWB is able to take advantage of this special privilege to generate a “financial cushion,” or non-market based revenue, that it can use to enhance returns to producers, discount export prices, or pay administrative expenses. Current WTO negotiations should build on U.S. and EU proposals on STEs and export credit guarantees to address potential trade-distorting practices of STEs such as the CWB.
An Exploration of Market Pricing Efficiency During the Dairy Options Pilot Program
(MSU Extension, 2004-09) Buschena, David; McNew, Kevin
Put options have been recommended as a substitute for price support programs (Gardner, 1977; also some more recent comments?), and subsidized option purchases have received some support in lieu of subsidized insurance programs (cite?). Put options are an interesting alternative to price supports because their market-determined price levels allow for flexibility and adjustments to relevant current and expected market conditions. Options markets should also be relatively free from the bureaucratic decision processes needed for administration of commodity price supports.
Agricultural Chemical Prices in Canada and the United States: A Case Study of Alberta and Montana
(MSU Extension, 2004-12) Smith, Vincent H.; Johnson, James B.
Differences in retail prices for similar or identical agricultural chemicals have been a source of controversy in the Prairie Provinces of Canada and the Northern Great Plains States of the United States since the mid-1990s. Such differences may exist because of differing pesticide regulations between the United States and Canada. Different regulations may inhibit trade between the two regions and isolate markets from one another. If this is the case, then regulatory harmonization that allows Canadian and U.S. agricultural producers to purchase agricultural chemicals in Canada or the United States would generally lead to harmonization of agricultural chemical prices.
Harvest-Time Protein Shocks and Price Adjustment in U.S. Wheat Markets
(MSU Extension, 2005-06) Goodwin, Barry K.; Smith, Vincent H.
Dynamic relationships between three classes of wheat are investigated using threshold VAR models incorporating the effects of protein availability. Changes in the stock of protein are found to generate significant impulse responses in the price of hard red spring wheat and hard red winter wheat but not soft red wheat. These impulse responses to identical changes in protein stocks are larger when the absolute deviations of protein stocks from normal levels are large. Shocks to the prices of individual classes of wheat result in complex impulse responses in the prices of the other wheats. Notably, however, a shock to the price of hard red winter weak appears to result in little or no impulse response in the price of hard spring wheat, though, importantly, the opposite is not true.
Re-opening the U.S./Canadian Border to Live Cattle and Beef Trade: Estimated Impacts on U.S. Beef Producers
(MSU Extension, 2005-09) Marsh, John; Brester, Gary W.; Smith, Vincent H.
In May 2003, Canadian authorities announced that a Canadian cow had tested positive for bovine spongiform encephalopathy (BSE or mad cow disease). Almost at once, the United States and many other countries banned all imports of Canadian cattle and Canadian beef. The consequences for Canadian cattle prices were severe. Export markets accounted for almost 40 percent of Canadian beef production and 30 percent of live cattle sales between 1995 and 2002. As a result, Canadian fed steer prices declined 55 percent from about $US 83/cwt in March of 2003 to about $US 37/cwt in September of 2003.
Regulating State Trading Enterprises in the GATT: An Urgent Need for Change? Evidence from the 2003-2004 U.S.--Canada Grain Dispute
(MSU Extension, 2006-02) Smith, Vincent H.
State Trading Enterprises (STEs) are one of the bete noirs of agricultural and other trade relations and trade negotiations. An STE is a government enterprises or quasi government enterprise that operates with special protections and/or privileges granted by its country’s central authority. STEs generally exist for one of two main reasons. Sometimes, as with many African parastatals, they are created to tax the domestic industry and/or imports for government revenue generation purposes (or income transfers to members of ruling elites). Alternatively, an STE’s mission is often to increase revenues or profits (though not necessarily both) from sales for domestic producers and/or processors and other marketing chain operations. In pursuing these revenue or profit objectives, STEs create trade distortions by implicitly levying tariffs on imports, taxing domestic sales, and subsidizing (or, on rare occasions, taxing) exports to different countries at different rates. They may also be vehicles through which domestic subsidies are more or less discretely funneled to producers, with corresponding implications for the effectiveness of disciplines on domestic supports. Hence, STEs are problematic in the context of trade negotiations.
Group Risk Income Protection
(MSU Extension, 2006-07) Johnson, James B.; Hewlett, John P.
Group Risk Income Protection (GRIP) is a federally-subsidized risk management tool to insure against widespread loss of revenue from an insured crop in a county. Crop producers whose yields are highly correlated with county yield are most likely to use this product to insure that the combination of yield and price results in a particular level of revenue. Unlike the related Risk Management Agency-approved Group Risk Plan insurance, either a price or yield decline may result in a producer being indemnified. If total revenue (price times yield) in county is less than a producer’s trigger revenue, the producer will be indemnified for revenue losses due to insurable causes. But producers need to recognize that they could incur reduced revenue from the insured acres of a crop and not be indemnified if there is not a commensurate decline in county per acre revenues for the crop.
Crop Insurance for Alfalfa Seed Production: A Pilot Program Available in Select Wyoming Counties
(MSU Extension, 2006-07) Johnson, James B.; Hewlett, John P.
In several western states including Wyoming a federally-subsidized multiple peril crop insurance product approved by the Risk Management Agency is offered on a pilot basis for forage seed production. In Big Horn and Park counties (Figure1) irrigated alfalfa seed production grown under certification standards or grown under an alfalfa seed contract is insurable.
GRP Rangeland Insurance for Montana
(MSU Extension, 2006-09) Schumacher, Joel Brent; Johnson, James B.; Brester, Gary W.
A new Group Risk Plan (GRP) Rangeland Insurance product is being offered by USDA’s Risk Management Agency (RMA) in 39 Montana counties. For counties in which this insurance product is not offered, USDA’s Farm Service Agency continues to offer the Noninsured Crop Disaster Assistance Program (See Briefing No. 14). The new GRP Rangeland Insurance product is intended to increase ranch managers’ options for managing risk related to the loss of grazing from any of several causes.
Nursery Crop Insurance in Wyoming
(2006-09) Johnson, James B.; Hewlett, John P.
Multiple peril crop insurance for nursery production has been available since 1989 for nurseries that received at least 50 percent of their gross income from wholesale marketing of nursery plants. Multiple peril nursery crop insurance is available to wholesale nurseries in all Wyoming counties (Figure 1). In June 2005 a final rule was published in the Federal Register that made major policy and implementation changes to the nursery crop insurance policy.
GRP Rangeland Insurance for Wyoming
(MSU Extension, 2006-10) Hewlett, John P.; Schumacher, Joel B.; Johnson, James B.
A new Group Risk Plan (GRP) Rangeland Insurance product is being offered by USDA’s Risk Management Agency (RMA) in 10 Wyoming counties. For counties in which this insurance product is not offered, USDA’s Farm Service Agency continues to offer the Noninsured Crop Disaster Assistance Program (See Briefing No. 14). The new GRP Rangeland Insurance product is intended to increase ranch managers’ options for managing risk related to the loss of grazing from any of several causes.
Health Information and Impacts on the Beef Industry
(2006-11) Marsh, John M.; Holzer, Bret M.
The economic well being of cattle producers depends upon numerous factors, including consumer demand for beef, red meat and poultry supplies, marketing costs, international beef trade, and agribusiness concentration. Changes in consumer beef demand are transmitted through the marketing channel and affect meat packer demand and prices for slaughter cattle and feedlot demand and prices for feeder cattle. Since the mid 1970s, consumer demand for beef has declined due to changes in consumer preferences, demographics, and relative meat prices (Marsh 2003). Based on an estimated annual retail beef demand index, retail beef demand declined by about 47 percent from 1970 to 2004. However, more recently, from 1998 to 2005 the index increased by about 22 percent (LMIC).
Livestock Mandatory Price Reporting and Effects on Lamb Price Risk
(2006-11) Marsh, John M.; McDonnell, Tom
In 1999, Congress passed the Livestock Mandatory Reporting Act (LMR) regulating the reporting of market information specific to cattle, swine, and lambs (and their products). The LMR program was implemented in April 2001 (USDA/AMS 2004) and was reauthorized by Congress in the fall of 2006. Under LMR, meat packers with recent 5-year slaughter histories of at least 125,000 cattle, 100,000 swine, or 75,000 lambs must electronically file daily summary information to the USDA’s Agricultural Marketing Service (AMS) on all transactions involving livestock purchases and meat sales. Detailed information is also to be reported by firms that import meat products and sell them into the domestic market. Overall, the LMR program is intended to provide transparency regarding pricing, marketing methods, and supply and demand conditions for livestock and livestock products (USDA/AMS 2004).
Montana Oilseed Markets: Historical Price and Production Statisitics
(2006-11) Schumacher, Joel B.
Oilseed crops are grown in Montana to satisfy awide variety of market demands and offer economic and agronomic diversification to Montana producers. The overall demand for oilseed products is comprised of numerous markets including many that can be categorized as niche markets. Trends in each of these markets influence the overall demand for oilseeds. This policy paper provides information on historical prices and production for oilseed crops raised in Montana.
Oilseed, Biodiesel and Ethanol Subsidies & Renewable Energy Mandates: US Federal & Selected State Initiatives
(2006-11) Schumacher, Joel B.
This study describes the major incentives and policies implemented by the federal government, the state of Montana and other selected state governments with respect to ethanol and biodiesel production and consumption. The federal incentives discussed include the Volumetric Ethanol Excise Tax Credit, Biodiesel Blenders Tax Credit, Small Producer Tax Credit, Renewable Fuels Standard, Alternative Fuel Infrastructure Tax Credit, and the Clean Fuels Program. Some of these programs encourage the production of biodiesel or ethanol through tax credits or direct payments. Others encourage the consumption of biofuels by offering credits or direct payments for investments in infrastructure that allow biofuels to be utilized.
The 2007 Farm Bill: Montana Producer Preferences for Agricultural, Food, and Public Policy
(2007-02) Johnson, James B.; Haynes, George W.; Brester, Gary W.
The Farm Security and Rural Investment Act of 2002 provides the direction for federal agricultural, food, and public policy through September of 2007. The 2002 Act is the most recent in a series of comprehensive farm bills that have authorized federal farm programs. When the 2002 Act expires, new legislation will guide future programs. In the absence of new legislation, federal farm programs could revert to permanent legislation dating from 1949. The presence of permanent legislation helps provide the impetus needed to insure that agriculture, food, and rural policy issues will be addressed by Congress and by United States Department of Agriculture (USDA) programs.
Small Scale Biodiesel Production: An Overview
(2007-05) Schumacher, Joel B.
Interest in renewable fuels has increased substantially in the past two years. Much of this interest is attributable to increases in the cost of traditional fuels, environmental concerns associated with fossil fuels, unease about America’s increasing dependence on foreign energy, and government programs to support the development and production of renewable fuels.
Harvest-Time Protein Shocks and Price Adjustment in U.S. Wheat Markets
(2007-08) Smith, Vincent H.; Goodwin, Barry K.
Dynamic relationships between three classes of wheat are investigated using threshold VAR models incorporating the effects of protein availability. Changes in the stock of protein are found to generate significant impulse responses in the price of hard red spring wheat and hard red winter wheat but not soft red wheat. These impulse responses to identical changes in protein stocks are larger when the absolute deviations of protein stocks from normal levels are large. Shocks to the prices of individual classes of wheat result in complex impulse responses in the prices of the other wheat varieties. Notably, however, a shock to the price of hard red winter weak appears to result in little or no impulse response in the price of hard spring wheat, though, importantly, the opposite is not true.
Adjusted Gross Revenue-Lite: A Whole Farm Revenue Insurance Available in Wyoming
(2008-02) Johnson, James B.; Hewlett, John P.; Griffith, Duane
Adjusted Gross Revenue-Lite (AGR-Lite) is a federally-subsidized whole-farm revenue protection insurance plan. The plan is a whole farm (ranch) revenue insurance that covers revenue losses from most farm-raised crop commodities, animal commodities and unprocessed (unaltered) animal products such as milk and wool. The plan protects against low revenue due to losses in production and declines in product quality and market price. Specifically, the plan provides protection against low revenue due to production losses attributable to unavoidable natural disasters and market fluctuations that impact farm revenue in the insurance year.