A&M center releases baseline analysis

The Agricultural and Food Policy Center at Texas A&M University has released its July 2002 Baseline Analysis Wednesday, the first comprehensive analysis of the effects of the new farm bill on farmers.

“The baseline shows that the economic viability of crop farmers is much improved over our last baseline,” said Dr. Joe Outlaw, Texas Cooperative Extension policy specialist in the Agricultural and Food Policy Center.

“Under the old farm bill, three-fourths of our representative crop farms were classified in poor financial condition. With the new farm bill in place, about 10 percent of the representative farms are classified as poor.”

While the 2002 farm bill provides a greater income safety net than the old farm bill, not all farmers are classified in a good financial position. Dr. James Richardson, a professor in the policy center, pointed out that almost half of the representative crop farms that the policy center tracks will likely face cash flow deficits more often than one year in four.

The report indicates much of this risk is associated with production.

“While the new farm program does contain an income safety net, poor crops could result in cash flow problems as a portion of support is tied to crop production,” Richardson said.

The report, which includes 95 representative farms across the country, analyzed the economic viability of feed grain, wheat, cotton, rice, dairy, cattle, and hog farms in major production regions in the United States under the recently enacted 2002 farm bill.

Of the 17 Texas crop farms included in the policy center baseline analysis, 10 are classified in good financial shape, five are classified as marginal due to cash flow pressures, and only two are classified as poor.

The two farms classified in poor financial condition (a 2,000- acre Hill County feed grain farm and a 400-head Stephenville dairy farm) experienced financial difficulties under the old farm bill. Under the new bill, they will likely see cash flow deficits in three out of four years.

Dr. David Anderson, Extension specialist in the policy center, indicated cattle and hog producers also appear more profitable under the new farm bill baseline.

However, lower milk prices will likely lead to increased cash flow pressures for dairy farmers. More than half of the representative dairy farms the policy center monitors will suffer cash flow deficits more often than one in four years.

The complete baseline report is available on the AFPC Web site at http://www.afpc.tamu.edu.

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