GA 2008 Predicting Peanut Yields(Pounds/Acre) By Different Models
And Comparison With NASS Forecast(Week01-02 as Forecasted
Aug. 1 and Week03-06 as Forecasted Sept. 1, Week07-11 as Forecasted
Oct. 1, Week12-14 as Forecasted Nov. 1)
3,300
3230
3150
3148
3150
3131
3165
3150
2915
2902
3196
3,200
3155
3119
3136
3145
3121
Yields(Pound/Acre)
3,100
3100
3100
3,000
3013
2,900
3100
3100
3038
3028
3100
3104
3100
3053
2988
Trend Model
NASS Forecast
2864
2757
2,800
Revised Model
2775
GPC Model
2699
2679
2672
2660
Wk01
Wk02
Wk03
2,700
3248
3242
2,600
2,500
Wk04
Wk05
Wk06
Wk07
Wk08
Wk09
Wk10
Wk11
Wk12
Wk13
Wk14
Economic Viability of the
Southeastern Representative Peanut Farms
over the Period 2005-2010
based on August 2004 Baseline
Overall Economic Viability1
P(Negative Ending Cash)2
P(Real Net Worth Decline)3
Farm A
1-1
1-1
Farm B
3-99
1-86
Farm C
1-35
1-1
Farm D
1-1
1-1
Farm E
1-1
1-1
Farm F
1-43
1-48
Farm G
1-1
1-1
Farm H
96-99
1-11
Farm I
1-1
1-1
Farm J
1-3
1-1
Farm K
1-1
1-1
1) Viability is classified as good (green), moderate (yellow), and poor (red) based on the probabilities of
<25
26-50
>50
having negative ending cash reserves and losing real net worth:
2) P(Negative Ending Cash) is the probability that the farm will have a negative ending cash reserve. Reported values represent the probabilities for 2005 and 2010.
3) P(Real Net Worth Decline) is the probability that the farm will have a loss in real net worth relative to the beginning
net worth. Reported values represent the probabilities for losing real net worth from 2002 to 2004 and 2002 to 2010.
Economic Viability of US Representative Peanut Farms over the
Period 2008-2013 based on January 2008 Baseline Benchmark
Overall Economic Viability1
P(Negative Ending Cash)2
P(Real Net Worth Decline)3
Farm A
3-59
1-35
Farm B
88-99
1-94
Farm C
99-99
1-99
Farm D
1-40
1-11
Farm E
99-99
1-28
Farm F
90-99
1-97
Farm G
44-74
1-20
Farm H
96-99
1-84
Farm I
81-99
1-64
Farm J
66-97
1-93
Farm K
8-20
1-1
Farm L
3-28
1-1
Farm M
39-89
1-84
Farm N
1-1
1-1
Farm O
29-83
1-40
Farm P
95-99
1-99
Farm Q
44-80
1-32
Farm R
55-92
1-69
Farm S
23-66
1-49
1) Viability is classified as good (green), moderate (yellow), and poor (red) based on the probabilities of
<25
26-50
>50
having negative ending cash reserves and losing real net worth:
2) P(Negative Ending Cash) is the probability that the farm will have a negative ending cash reserve. Reported values represent the probabilities for 2008 and 2013.
3) P(Real Net Worth Decline) is the probability that the farm will have a loss in real net worth relative to the beginning
net worth. Reported values represent the probabilities for losing real net worth from 2005 to 2008 and 2005 to 2013.
SE Representative Peanut Farms
Total Variable Input Cost
$/AC change
from ’02 to ‘08
Percent change
from ’02 to ‘08
Irrigated Peanuts
$214
57%
Non-Irrigated
Peanuts
$155
54%
Chart 1. Overall Economic Viability of Various U.S. Representative
Farm Types Over the Period 2008-2013
100%
80%
91%
84%82%
74%
67%
60%
57%
40%
20%
40%
35%
25%
21%
17%
11%
21%
9%11%9%
0%
0%
GOOD
Wheat
17%
16%
Feed Grain
MARGINAL
Dairy
Cotton
Rice
5%
9%
POOR
Cow-Calf
Peanut
The Food, Conservation, and Energy Act of 2008
Enacted into law on June 18, 2008
Effective date: May 22, 2008
Regulations deadline: Sept. 16, 2008
Some features deadline: Dec. 16, 2008
Treatment of Farms with Limited Base Acres
• Sum of the base acres of the farm is 10 acres or
less
– No Direct Payments
– No Counter-Cyclical Payments
– No Average Crop Revenue Election Payments
• Exception – Farm is wholly owned by a socially
disadvantaged farmer or rancher; farm is wholly
owned by a limited resource farmer or rancher
Payment Acres
Year
Percentage of Base Acres
Used to Calculate Direct
Payments
Percentage of Base Acres Used to
Calculate Counter-Cyclical
Payments
2008
85%
85%
2009
83.3%
85%
2010
83.3%
85%
2011
83.3%
85%
2012
85%
85%
Average Crop Revenue Election Program (ACRE)
• 2009 through 2012 crop years
• Irrevocable election
• Failure to make election (all producers on a
farm), then farm considered enrolled in DCP
• Alternative to receiving counter-cyclical payment
• 20 percent reduction in direct payments
• 30 percent reduction in marketing assistance
loan rates
Average Adjusted Gross Income (AGI)
Limitations for 2009 through 2012
Payment Limitation Amounts - 2008 through
2012 ($40,000/$65,000)
Separate payment limitation for MAL gains and
LDP’s for wool, honey, mohair, peanuts, and
unshorn pelts
Farm Bill Comparison (Peanuts)
2002 Farm Bill
2008 Farm Bill
Direct Payment
$36/ton
Same
CCP Target Pr
$495/ton
Same
Market Loan
Rate
$355/ton
Same
2008 Crop Peanut Loan Rates
• On June 26, 2008,
CCC announced the
2008 crop peanut
loan rates by type.
• Peanut premiums and
discounts remain
unchanged from 2007
crop year for 2008 but
undecided for 20092012.
Peanut Type
Loan Values Per
Ton
Virginia
$357.32
Runner
$354.75
Spanish
$348.95
Valencia
$357.32
Peanut Storage, Handling, and Associated Costs (LITE)
• CCC shall pay handling and other associated
costs (other than storage costs) when peanuts
placed into loan
• Repayment of handling and other associated
costs when peanuts are redeemed
• CCC pays storage, handling, and other
associated costs when peanuts are forfeited
Disaster Trust
Fund
Supplemental
Revenue
Assistance
Livestock
Forage
Program
Tree
Assistanc
e
Program
Livestock
Indemnit
y
Livestock,
Program
Honey
Bees,
Aquacultur
e Program
Crop loss-provides assistance to farmers who suffer crop
losses due to natural disasters.
Livestock Forage-provides assistance to ranchers who suffer
grazing losses due to drought.
Tree assistance-provides assistance to orchardists whose vines
or trees are killed due to a natural disaster.
Livestock indemnity-provides assistance to ranchers whose
livestock are killed in a natural disaster.
Livestock, honeybees, farm-raised fish-provides funds for losses
that are not covered by any other program.
Supplemental Revenue Assistance Program (SURE)
• Covers crop losses due to natural disasters
• Producers must have purchased or be enrolled
in:
– CAT for insurable crops
– NAP for uninsurable crops
• Waiver provision of CAT or NAP purchase for
socially disadvantaged, limited resource, or
beginning farmer or rancher
Supplemental Revenue Assistance Program (SURE)
• “Farm” means the sum of all crop acreage in all
counties that is planted or intended to be planted for
harvest by the eligible producer
Farm Bill & WTO:
Is There Co-Existence for Peanuts?
OTHER
CROPS
PERS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
OTHER
CROPS
Peanut Environmental Resource Stewardship
WTO: Limiting scope of traditional income support
programs
The Brazilian cotton case against the U.S. is an example
of non-compliance within the WTO. The U.S. has lost
every attempt to fight the Brazilian challenge.
Rewards a peanut producer that adopts a resourceconserving crop rotation to achieve beneficial crop
rotations as appropriate for the land controlled by the
producer.
OTHER
CROPS
PERS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
OTHER
CROPS
Peanut Environmental Resource Stewardship
TRADE COMPLIANT
• Annex 2 of GATT Agreement on Agriculture
implies PERS is an allowable domestic
support program
– Decoupled income support program
– Payments under environmental program
Conservation Stewardship Program (CSP):
OTHER
CROPS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
Supplemental Payments for Resource-Conserving Crop Rotations
OTHER
CROPS
Benefits of a Resource-Conserving Crop Rotation Program
WTO compliant. Fits into the “GREEN BOX” of trade agreements
Increase peanut yields per acre over time
Decrease peanut disease pressure over time
Provides incentive not to plant peanuts in soils where peanut yields and
quality typically suffer
The public will benefit from significantly less chemical usage and improved
soils for generations to come
PERS would be an optional program to producers
Producers would receive additional income from increased yields and
quality as well as from the PERS payments
Sets precedents for future environmental stewardship programs
Conservation Stewardship Program (CSP):
OTHER
CROPS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
Supplemental Payments for Resource-Conserving Crop Rotations
OTHER
CROPS
Under the Conservation Title, Starting on page 127 of 2008 Farm Bill.
‘‘(f) SUPPLEMENTAL PAYMENTS FOR RESOURCE-CONSERVING
CROP ROTATIONS.—
‘‘(1) AVAILABILITY OF PAYMENTS.—Producers that agree to adopt
resource-conserving crop rotations as determined by the Secretary of
Agriculture to achieve beneficial crop rotations as appropriate for the land
of the producers.
‘‘(g) PAYMENT LIMITATIONS.- $200,000 per person or legal entity
during any 5-year period.
Conservation Stewardship Program (CSP):
OTHER
CROPS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
Supplemental Payments for Resource-Conserving Crop Rotations
OTHER
CROPS
OK, so where do peanut
farms fit in this program?
How can the CSP Crop Rotation
Program Work for YOU???????
Crop Mix by Percent of the U.S.
Representative Peanut Farms
(2006 Update)
FARM ID
PEANUTS
COTTON
60.0%
10.0%
2000
FARM M
18.5%
55.6%
33.3%
52.4%
14.3
700
FARM N
16.7%
FARM D
21.4%
78.6%
1400
FARM O
22.2%
FARM E
63.2%
30.5%
2375
FARM P
FARM F
12.4%
84.7%
2.9%
1210
FARM G
33.3%
54.9%
5.9%
5.9%
FARM H
33.3%
47.9%
12.5%
6.3%
FARM I
33.3%
66.7%
1500
2000
FARM B
30.0%
FARM C
6.3%
FARM J
33.3%
52.5%
FARM K
52.9%
47.1%
14.3%
20.0% 40.0%
Total Acres
Total Acres
23.3%
53.3%
OTHER
OTHER
16.7%
26.7%
CORN
CORN
FARM L
COTTON
3000
PEANUTS
11.7%
FARM ID
8.3%
FARM A
1500
18.5%
1350
66.7% 16.7%
1200
66.7%
11.1%
1800
26.7%
16.7%
16.7% 40.0%
3000
FARM Q
19.2%
14.4%
1275
FARM R
31.3%
1200
FARM S
22.5%
850
OTHER
CROPS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
OTHER
CROPS
7.4%
56.8%
2500
62.5%
6.3%
4000
22.5%
55.0%
1600
9.6%
Conservation Stewardship Program (CSP):
OTHER
CROPS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
Supplemental Payments for Resource-Conserving Crop Rotations
OTHER
CROPS
19 U.S. Representative
Peanut Farms:
Total Cultivatable Acres
Planted in Peanuts
3 Year Rotation
< 33.3%
Peanuts
> 33.3%
Peanuts
Percentage of 19 U.S.
Representative Farms
89%
11%
4 Year Rotation
< 25%
Peanuts
> 25%
Peanuts
Percentage of 19 U.S.
Representative Farms
58%
42%
Conservation Stewardship Program (CSP):
OTHER
CROPS
OTHER
CROPS
Supplemental Payments for Resource-Conserving Crop Rotations
CROP
ROTATIONS
PEANUTS
OTHER
CROPS
Will the CSP program be financially beneficial for you to enroll?
Assuming the Rotation Program will operate similar to other CSP programs,
a producer should do the following prior to signing CSP contracts:
Project your farm’s annual income over the next 5 years with your farm’s
current crop mix and acreage
Project your farm’s annual income over the next 5 years with the new
compliant crop mix and acreage.
Compare farm’s income with each scenario and determine how much
CSP payment would be required to offset loss of income from peanut
acreage reduction.
Conservation Stewardship Program (CSP):
OTHER
CROPS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
Supplemental Payments for Resource-Conserving Crop Rotations
OTHER
CROPS
Example, using the U.S. Representative Peanut Farms
Total Acres
2000
COMPLIANT
25.0%
59.2% 15.8%
2000
AVG PRICES
$500
$0.80
$6.00
OTHER
52.5% 14.3%
CORN
PEANUTS
33.3%
COTTON
FARM J
NON-COMP
Methodology:
1st, Shifted Non-Irrigated
Peanut Acres to NonIrrigated Cotton Acres
2nd, Shifted Irrigated Peanut
Acres to Irrigated Corn Acres
Change in Net Cash Farm Income (NCFI) 2009-2013
is an average loss of $33,010 per year.
Conservation Stewardship Program (CSP):
OTHER
CROPS
OTHER
CROPS
CROP
ROTATIONS
PEANUTS
Supplemental Payments for Resource-Conserving Crop Rotations
OTHER
CROPS
Example, using the U.S. Representative Peanut Farms
Total Acres
COTTON
47.1%
850
COMPLIANT
25.0%
75.0%
850
AVG PRICES
$500
$0.80
OTHER
PEANUTS
52.9%
CORN
FARM K
100%
Dryland
NON-COMP
Methodology:
1st, Shifted Non-Irrigated
Peanut Acres to NonIrrigated Cotton Acres
$6.00
Change in Net Cash Farm Income (NCFI) 2009-2013
is an average loss of $44,946 per year.
Exceeds Payments Limits
Thank You
for Your Attention.
Questions?
Basic Provisions
Payment Limitation Amounts - 2008 through 2012
Program
Payment Limitation Per Crop Year
DCP (any covered commodity except
peanuts)
Direct - $40,000
Counter-Cyclical - $65,000
DCP - Peanuts
Direct - $40,000
Counter-Cyclical - $65,000
ACRE
ACRE Payment – Sum of $65,000 and
the amount by which the Direct Payment
limitation is reduced for the 20 percent
reduction. Example – Producer
participates in ACRE on all farms –
ACRE Payment Limit is $73,0000
Direct Payment Limit is $32,000
Basic Provisions
Payment Limitation Amounts - 2008 through 2012
Program
Payment Limitation
Supplemental Agricultural Disaster
Assistance Programs
Total amount of disaster assistance
payments received directly or indirectly
may not exceed $100,000 for any crop
year
CRP
$50,000 per fiscal year
NAP
$100,000 per crop year
Average Adjusted Gross Income (AGI) Limitations for 2009 through 2012
Commodity Programs, Disaster Assistance - AGI
– DCP, ACRE, Marketing Loan Gain, LDP,
Supplemental Agricultural Disaster Assistance,
MILC, NAP
• Average AGI – 3 taxable years preceding the
most complete taxable year
• Nonfarm AGI greater than $500,000, the
individual or entity ineligible
• Farm AGI greater than $750,000, the individual
or entity ineligible
Average Adjusted Gross Income (AGI) Limitations for 2009 through 2012
Conservation Programs – AGI
• Average AGI – 3 taxable years preceding the most
complete taxable year
• Total Nonfarm AGI greater than $1 million, the individual
or entity ineligible unless 66.66% is derived from
farming, ranching, and forestry operations
• Secretary may waive ineligibility on a case-by-case basis
if determined that environmentally sensitive land of
special significance would be protected
Marketing Assistance Loan (MAL) and
Loan Deficiency Payment (LDP)
• Authorized for crop years 2008 through 2012
• $75,000 payment limitation for MAL gains and LDP’s for
the 2008 crop year; Separate combined $75,000
payment limitation for MAL gains and LDP’s for wool,
honey, mohair, peanuts, and unshorn pelts
• Beneficial interest policy for the 2008 crop year same as
2002 Act
• MAL have a term of 9 months beginning on first day of
the first month after the month in which the loan is made
• LDP rate in effect when a producer makes request