Agricultural and Food Policy
 Agri Outlook Radio
Number 201
Policy/Farm Act: Part 1. The 2008 Farm Bill’s Impact on U.S. Rice Producers (3:26 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.
The New Farm Bill’s Impact on U.S. Rice Producers
The 2008 farm bill coupled with the domestic and global inflationary economic
setting and the trend toward increasingly open global trade has significantly
increased our U.S. rice producers’ exposure to risk and uncertainty, but it is giving
our producers an expanding world of opportunity. At the same time they must
focus on managing their exposure to risk and uncertainty in order to capitalize
on opportunity.
In the commodity title of the farm bill U.S. rice producers were able to maintain
traditional farm government program policy mechanisms of marketing loans, loan
deficiency payments/marketing loan gains, counter-cyclical payments, and target
prices. They were less successful in limiting payment limit reductions.
The excessive payment limit reductions which don’t start until the 2009
period, I believe, has more negative than positive consequences to the
advancement of commercial rice production. If policymakers truly want to advance
the global movement toward increasingly open markets and free trade, then they
need to nurture commercial rice and cotton producers, not constrain their
ability to compete.
The thought back in 2004 and early 2005 as the farm bill debate began was
traditional farm policy mechanisms had historically provided rice farmers with a
reasonable safety net and a continuation of traditional policy mechanisms even
though they were not indexed, seemed the best policy compromise. It’s easy to
forget just how many wanted a major departure away from traditional farm policy.
The problem with traditional farm policy mechanisms is they are not indexed
to take into account the highly inflationary domestic and global economic
setting that emerged in a dynamic way since the farm bill debate began. Our rice
producers 2008 cost of production are up a good 100% over 2002. Since no one
anticipated the radical increase in production costs and rising commodity
prices, these traditional policy mechanisms remain at 2002 farm bill levels
without being adjusted for inflation. Obviously, U.S. rice producers’ 2008 per
acre safety net relative to their cost of production are drastically reduced
when compared to their 2002 per acre safety net.
This has been Robert Coats Extension Economist University of Arkansas
Division of Agriculture.
Back to Agricultural and
Food Policy Radio
|
