Agricultural and Food Policy
 Agri Outlook Radio
Number 200
Policy/Farm Act: Part 2. The 2008 Farm Bill’s Impact on U.S. Rice Producers, Target Price and Direct Payments (4:07 minutes)
Audio/Video Script:
Robert Coats, Ph.D.
Extension Economist and Professor
University of Arkansas, Division of Agriculture
This is Robert Coats Extension Economist University of Arkansas Division of
Agriculture.
Part 2 - The New Farm Bill’s Impact on U.S. Rice Producers
Regarding the rice target price, the 2002 farm bill had one rice target price
an all rice target price of $10.50 per cwt. The 2008 farm bill designates two
rice target prices. The first is a long grain target price and the second is a
medium/short grain target price. The long grain and the medium/short grain
target price are set at $10.50 per cwt. This adjustment in the rice target price
enhances fairness between long grain and medium/short grain producers when
counter-cyclical payments are made. For several years long grain rice producers
would have received higher counter-cyclical payments if a distinction had been
made because the medium grain farm market price was significantly higher than
the long grain farm market price. The majority of medium grain rice is produced
in California.
Considering the rice direct payment, the 2008 farm bill continues the rice
direct payment begun under the 2002 farm bill. The direct payment rate of $2.35
per cwt is unchanged, but the rate is now designated for long grain and
medium/short grain rice and not for just all rice as under the 2002 farm bill.
Distinguishing between long and medium/short grain rice is also part of the
change to allow calculation of a fair counter-cyclical payment when the rice
producers’ farm market price for long grain and medium/short grain differs.
There is another difference in the calculation of the total direct payment
for 2009-2011. For 2008 the calculation of the total direct payment for
producers on a farm is unchanged and is 85 percent of the farm’s base acreage
times the farm’s direct payment yield times the direct payment rate. For the
2009-2011 periods, the farm’s base acreage percentage changes from 85 to 83.3
percent. For 2012, the farm’s base acreage percentage reverts back to 85
percent. The reduction in percentage of base acres during 2009-2011 allows
needed farm bill savings. The return to 85 percent in 2012 is designed to
preserve farm base payment acres in the next farm bill debate.
The total possible rice direct payment for a producer on a farm equals 85
percent of the farm’s base acres for 2008 and 2012 times the farm’s direct
payment yield times the counter-cyclical payment rate. The total possible rice
direct payment for a producers for the years 2009-2011 equals 83.3 percent
of the farm’s base acres times the farm’s direct payment yield times the
counter-cyclical payment rate.
This has been Robert Coats Extension Economist University of Arkansas
Division of Agriculture.
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