land

Information about land

Published on October 4, 2007

Author: Marigold

Source: authorstream.com

Content

Slide1:  Agricultural Policy Analysis Center - The University of Tennessee - 310 Morgan Hall - Knoxville, TN 37996 www.agpolicy.org - phone: (865) 974-7407 - fax: (865) 974-7298 Farmland Conservation: Agricultural Policy Considerations Land Trust Alliance Southeast Program May 11, 2002 Kelly Tiller University of Tennessee Agricultural Policy Analysis Center What Is A Typical Farm?:  What Is A Typical Farm? There is no one-size-fits-all description of a farm today Even “family farms” vary greatly in terms of what they produce, characteristics, economic situation, and household and business arrangements Large and very large family farms are most likely to be viable economic businesses Most small farms subsidize the costs of farming activities with off-farm income sources Farm Typology Groups:  Farm Typology Groups Limited-resource. Gross sales < $100,000, total farm assets < $150,000, total operator household income < $20,000. Retirement. Small farms, operators report they are retired. Residential/lifestyle. Small farms, operators report a major occupation other than farming. Farming-occupation/low-sales. Small farms with sales less than $100,000, operators report farming as major occupation. Farming-occupation/high-sales. Small farms with sales between $100,000 and $250,000, operators report farming as major occupation. Small Family Farms (sales less than $250,000) Large family farms. Sales between $250,000 and $499,999. Very large family farms. Sales of $500,000 or more. Other Family Farms Nonfamily farms. Farms organized as nonfamily corporations or cooperatives, farms operated by hired managers. Nonfamily Farms USDA, Economic Research Service, 1998 Farms, Land, and Production:  Farms, Land, and Production Limited-resource Retire-ment Residential/lifestyle Low-sales High-sales Large Very large Nonfamily Farming-occupation Small family farms (sales less than $250,000) Other family farms USDA, Economic Research Service, 2000 Agricultural Resource Management Study Describing Farms:  Describing Farms 62% of all farms are in the limited-resource, retirement, and residential/lifestyle categories, but produce only 9% of farm output Small family farms manage and operate the bulk of farm assets (69%), including the soil, water, energy, and natural habitat resources associated with farmland use Large family farms and nonfamily farms accounted for 66% of production in 2000 Farm Policy and Family Farms:  Farm Policy and Family Farms A “one-size-fits-all” policy for family farms would be unlikely at best The nonfarm economy is critically important to small family farm households Government payments and off-farm work help equalize average income for farm and nonfarm households Government payments have been most relevant to high-sales small farms and large family farms Major Crop Prices:  Major Crop Prices Corn Wheat Soybeans Cotton USDA, National Agricultural Statistics Service, 2002 U.S. Major Crop Prices, Indexed:  Major Crop Prices, Indexed Corn Wheat Soybeans Cotton USDA, National Agricultural Statistics Service, 2002 U.S. Farm Income & Expenses:  Farm Income & Expenses Source: Tennessee Agricultural Statistics Service, 2001 U.S. Corn Exports: Actual & Projected, 1993-2005:  U.S. Corn Exports: Actual & Projected, 1993-2005 USDA Feb. 1996 Projections USDA Feb. 2000 Projections Actual U.S. Share Of World Soybean Exports:  1996-00 Average: 60% 1986-95 Average: 67% 1976-85 Average: 80% 1996 - $7.35 - 66% 1998 - $4.93 - 56% 1999 - $4.63 - 56% 2000 - $4.50 - 51% U.S. Share Of World Soybean Exports Source: U.S. PS&D Database 3-Crop Acreage & Price Index (Cotton, Soybeans, Corn):  3-Crop Acreage & Price Index (Cotton, Soybeans, Corn) Source: Estimated Using National Agricultural Statistics Service Data U.S. Gov’t Payments by Program:  Gov’t Payments by Program Source: Tennessee Agricultural Statistics Service, 2001 2000 Gov’t Payments As A Percentage Of Net Farm Income:  2000 Gov’t Payments As A Percentage Of Net Farm Income USDA, National Agricultural Statistics Service, 2001 Government Payments by Farm Type:  Government Payments by Farm Type Limited-resource Retire- ment Residential/ lifestyle Low-sales High-sales Large Very large Nonfamily Farming-occupation Small family farms (sales less than $250,000) Other family farms USDA, Economic Research Service, 1998 Agricultural Resource Management Study Government Payments:  Government Payments High-sales small family farms, large, and very large family farms received nearly 70% of all government payments They are most likely to specialize in cash grains, covered by commodity programs Government payments accounted for more than 10% of gross cash income for limited resource and retirement farms Retirement farms received more than 25% of CRP payments Though a small proportion of the total, payments have helped keep many limited-resource farms afloat Indexed 4-Crop Acreage & Price (Soybeans, Cotton, Corn, Wheat):  4-Crop Indexed Acreage Indexed 4-Crop Acreage & Price (Soybeans, Cotton, Corn, Wheat) 4-Crop Indexed Price 2002 Farm Bill:  2002 Farm Bill The Farm Security and Rural Investment Act of 2002 Replaces 1996 Farm Bill and will remain in place for 6 years beginning crop year 2002 (through 2008) Status: Conference bill passed House and Senate, Administration expected to sign Increases agriculture spending by 70% over levels approved in 1996 Farm Bill Essentially extends and expands 1996 commodity programs and provides a mechanism to automatically distribute “emergency payments” made since 1998. Major Commodity Provisions:  Major Commodity Provisions Allows producers flexibility in planting without “giving up” any established base Continues to pay producers of major commodities direct annual decoupled payments Allows updating program base acres and yields Loan rates (minimum price guarantees) are increased for several commodities Introduces a Counter Cyclical Payment program to replace the “double-AMTA” payment 2002 Farm Bill Major Commodity Provisions:  Major Commodity Provisions Peanut quota buyout Adds program crops: soybeans, peanuts, wool and mohair, honey, pulse crops Includes a new dairy program New options for timing of payments Payments capped at $360,000, virtually unrestricted with generic certificates 2002 Farm Bill Fixed Payments & Target Prices:  Fixed Payments & Target Prices Marketing Loan Rates:  Marketing Loan Rates 2002 Farm Bill Commodity Payments Example:  Commodity Payments Example Large grain farm in Northwest TN (Weakley County), TNG2400, representative farm 2,400 acre grain farm, owns 600 acres and cash leases 1,800 Assumptions, 1998-2001: Farms 2,900 acres: 1,080 corn, 500 double-crop wheat, 500 double-crop soybeans, 820 full-season soybeans Period average yields (in bushels): 125 corn, 55 wheat, 40 soybeans 2002 Farm Bill TNG2400 Under 1996 FB:  TNG2400 Under 1996 FB Under 1996 Farm Bill: Base acres: 1,200 corn, 600 wheat Base yields: 80 bu. corn, 32 bu. wheat AMTA payments: $28,821 (1,200 ac * 0.85) * 80 bu/ac * $0.261/bu = $21,298 (600 ac * 0.85) * 32 bu/ac * $0.461/bu = $7,523 Emergency payments basically doubled AMTA Marketing loan gains: $71,988 $4,514 corn, $553 wheat, $71,435 soybeans 1996 Farm Bill TNG2400 – Base Acres:  TNG2400 – Base Acres Base acreage options: Keep current AMTA acres and add soybean base up to total eligible acreage 1,200 corn, 600 wheat, 1,100 soybean Update all base acres using 1998-2001 average planted acres 1,080 corn, 500 wheat, 1,320 soybean 2002 Farm Bill TNG2400 – Direct Payment Yield:  TNG2400 – Direct Payment Yield Must use “old” AMTA yield for established base crops Multiply 1998-2001 average proven yield by an adjustment factor (0.78) for new oilseed crops Use 75% of county average yield as a “plug” for any year with very low or no yield 2002 Farm Bill TNG2400 – CCP Yield:  TNG2400 – CCP Yield IF farm updates all base acreages, can update yields for counter-cyclical payments Yield update is higher of: 70% of the difference between current (1996) AMTA yields and updated 1998-2001 average yields 93.5% of 1998-2001 average yields Use 75% of county average yield as a “plug” for any year with low/no yield 2002 Farm Bill TNG2400 – Base Acres:  TNG2400 – Base Acres 2002 Farm Bill TNG2400 – Base Yields:  TNG2400 – Base Yields 2002 Farm Bill TNG2400 – Revenue:  TNG2400 – Revenue 2002 Farm Bill Conservation Programs:  Conservation Programs 2002 Farm Bill provides $17.1 billion for conservation programs 80% increase over the current conservation spending marks Over half goes to the Environmental Quality Incentives Program (EQIP) Significant increase for Farmland Protection Program Continued Conservation Programs:  Continued Conservation Programs Environmental Quality Incentives Program, funded at $9b Promotes ag production and environmental quality as compatible goals Goal is to optimize environmental benefits Conservation Reserve Program, increases from 36.4 to 39.2 million acres Wetlands Reserve Program, increases to 2.3 million acres Farmland Protection Program:  Farmland Protection Program Provides matching funds to help purchase development rights to keep productive farmland in agricultural uses Adds non-profit organizations as eligible entities Recognizes need to protect historic and archaeological resources located on farms and ranches USDA provides up to 50% of fair market easement value Requires 30 year minimum easement, with priority to perpetual easements Program administered by USDA’s NRCS Farmland Protection Program:  Farmland Protection Program Program has provided $53.4m to protect 108,000 acres since 1996 Now funded at $985m, a 20-fold increase FY 2002: $50m FY 2003: $100m FY 2004-5: $125m FY 2006: $100m FY 2007: $97m Qualifications for FPP:  Qualifications for FPP Prime, unique or other productive soil Included in a pending offer from a NGO, state, tribe or local farmland protection program Privately owned Covered by a conservation plan Large enough to sustain agricultural production Accessible to appropriate ag markets Surrounded by parcels of land that can support long-term ag production New Conservation Programs:  New Conservation Programs Conservation Security Program: $2b Incentive payments for stewardship practices Grasslands Reserve Program: $254m 2 million acres of pastureland 10 to 30 year agreements and easements (40%) Permanent easements (60%) Small Watershed Rehab. Program: $275m Agriculture Trends & Observations :  Agriculture Trends & Observations Increasing use of production and marketing contracts Movement toward value-added commodities and niche markets Changes in the federal tobacco program will have a significant regional impact Current farm policy has significant potential to affect farmland values Value of Contract Agriculture:  Value of Contract Agriculture All Agriculture: $192 Billion Non-Contract 68 % Marketing 21 % Source: USDA, 1998 Agricultural Resource Management Study Production 14 % Value of Production Contracts:  Value of Production Contracts Production Contract 14 % All Agriculture: $192 Billion Source: USDA, 1998 Agricultural Resource Management Study Livestock $25 Billion Crop $2 Billion Value of Marketing Contracts:  Value of Marketing Contracts Marketing Contract 21 % All Agriculture: $192 Billion Source: USDA, 1997 & 1998 Agricultural Resource Management Study Livestock $20 Billion Crop $21 Billion Contracting & Farm Structure:  Contracting & Farm Structure Source: USDA, 1998 Agricultural Resource Management Study Trends in Contracting:  Trends in Contracting Farms organized as partnerships or corporations twice as likely to contract Marketing contract use on farms outnumbers production contract use 4 to 1 Average sales on farms with production contracts 10 times greater than cash sales Expect to further increase the use of production contracts for livestock, hogs Trends (Continued):  Trends (Continued) Rural Communities May Need To Seek New Sources Of Economic Growth Market Development, Processing, Packaging, Transportation, Information Opportunities For Farmers To Create Market Power By Producing Higher Value, Attribute-Specific Commodities Slide44:  The Food Dollar, 1999 Value-Added Agriculture Examples:  Commodity Added Value Apples Apple Jelly Farming Entertainment Farming Corn Popcorn Sweet Potatoes Sweet Potato Muffins Value-Added Agriculture Examples Slaw Salsa Soil Amendment Hot Pepper Sauce Jams & Jellies Value-Added Projects:  Value-Added Projects Burley Tobacco Basic Quota:  Burley Tobacco Basic Quota Source: USDA, Farm Service Agency 1980-1998 Avg. = 599 mil. Post- 1998 Avg. = 339 mil. TN Harvested Tobacco Acreage:  TN Harvested Tobacco Acreage Burley Tobacco All Tobacco Source: Tennessee Agricultural Statistics Service, 2001 Declining Tobacco Income:  Declining Tobacco Income Many assume that the tobacco settlement and public health concerns are responsible for declining tobacco income Larger factors include price above world price, increasing imports, declining exports, movement of cigarette production overseas Quickly moving toward contract production, overhaul or termination of federal tobacco program Tobacco quota buyout on the horizon? About $15 billion in 6 states in 5 years? US Avg. Farm Real Estate Value:  US Avg. Farm Real Estate Value USDA, National Agricultural Statistics Service, 2001 Ag Policy and Farmland Values:  Ag Policy and Farmland Values Direct government payments have a significant impact on farmland values Increasing land values increase fixed cost of ag production without corresponding increase in productivity, often without increasing active farmer’s wealth Farm program payments per acre vary geographically Farm Commodity Program Payments Vary Regionally:  Farm Commodity Program Payments Vary Regionally Ag Policy and Farmland Values:  Ag Policy and Farmland Values The degree to which program payments affect land values depends partly on the form of the payments Direct payments attached to land have a greater effect than production-based LDPs Landowner gains, lessee loses Relatively more “certainty” in 2002 Farm Bill direct payments will have a greater effect on land values For More Information … www.agpolicy.org:  For More Information … www.agpolicy.org APAC’s Weekly Policy Column:  To receive an electronic version of the weekly ag policy column by APAC Director Daryll Ray, send an email to: [email protected] requesting to be added to APAC’s Policy Pennings listserv APAC’s Weekly Policy Column

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