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Impacts of Farm Policy Alternatives on the Representative Tennessee Cotton Farms

Kelly H. Tiller and Jennifer G. Brown


ABSTRACT

This research estimates the farm-level impacts of two alternative farm bill proposals (H.R.2646 and S.1731) on the financial performance and strength of two representative Southwest Tennessee cotton farms: a 1,900 acre cotton farm in Fayette County and a 4,050 acre cotton farm in Haywood County. The representative farms were developed from detailed farm data collected from producer panels using a consensus method and processed using the stochastic FLIPSIM model and baseline agricultural and economic projections from the 2001 FAPRI baseline. Relevant elements of both policy scenarios evaluated include a continuation of fixed, decoupled payments on an expanded number of crops, planting flexibility, an option to update farm base acres, counter-cyclical payment provisions, and continuation of marketing loan provisions. Under both policy alternatives, both farms maximize income by updating their farm base acreage. Both farms improve their financial position and reduce their risk considerably under both proposals, with net cash farm income slightly higher under the S. 1731 proposal than under the H.R. 2646 proposal. Higher net cash farm incomes for both farms result primarily from the influx of government payments under both alternative policy scenarios. Comparatively, the large Tennessee cotton farm experiences greater gains in profitability from the two policy alternatives.





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Document last modified May 20, 2002