WASHINGTON, May 11 – The current farm program baseline tilts heavily in favor of cotton, wheat, peanuts and rice, according to a short primer on farm program budgeting prepared by a Cornell University agricultural economist.

Using Congressional Budget Office projections and an estimate of shares of crop insurance benefits over the next decade, Andrew Novakovic calculates that cotton farmers stand to earn almost 30 percent of their gross receipts from government programs, wheat growers 20 percent, rice producers about 17 percent and peanut growers nearly 13 percent. Government shares of income for corn are about 8 percent and soybeans 7 percent. 

However, because corn is the largest of the program crops, it accounts for 11 percent of projected commodity outlays, followed by wheat at 6 percent and soybeans 4 percent. Cotton outlays are projected at 3 percent. Non-commodity-specific outlays take the biggest share of projected mandatory program spending – crop insurance 43 percent and conservation 30 percent.

Novakovic, the E.V. Baker professor of agricultural economics in Cornell’s School of Applied Economics and Management, wrote the paper to call attention to the relative small share of projected federal farm program spending will go to the dairy program. His dairy expertise is long-standing; not only does his university and extension work focus on dairy farm management but also he was appointed by Secretary of Agriculture Tom Vilsack to chair the USDA Dairy Policy Advisory Committee in 2010-2011.

He points out that dairy programs will account for a “virtually undetectable” share of only 0.1 percent of farm program spending over next decade compared to milk producers’ share of total gross farm cash receipts nationwide is projected to be 24 percent. “As Congress continues to look for that fair balance that levels the playing field, participants in the dairy industry could understandably question whether or not they are getting their fair share and just how much of their current, small baseline they should give up for the greater good,” he writes.

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However, beyond dairy, the paper is provides a useful look at how federal funds are expected to distributed among commodities and regions. Novakovic recognizes that concepts like “level playing field” and “our fair share” are subjective and highly charged. Defining either “seems to curiously depend on what side of any issue one is. It is clear that not everyone uses the same level or has precisely the same idea about what is fair.”

He uses USDA Economic Research Service graphics that illustrate that the South receives the highest share, followed by the Northern Plains and Mountain states, noting that southern agriculture tends to have significant incomes from cotton, peanuts, rice, tobacco and other crops not grown outside the region. The Northern Plains and Mountain states tend to have higher shares of wheat and livestock and the Northeast and Upper Midwest have relatively more dairy.

See “The Challenge of the Congressional Dairy Baseline” at http://dairy.wisc.edu/PubPod/Pubs/IL12-04.pdf

 

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