Analysis of Commodity Program Adjustments for U.S. Rice in Stochastic Framework

Eddie C. Chavez and Eric J. Wailes

No 119772, 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama from Southern Agricultural Economics Association

Abstract: Potential adjustments in U.S. commodity program for rice are evaluated in this paper using stochastic analysis in a global modeling framework. Corresponding threshold and loss-compensatory increases in target price and loan rates are determined with assumed outright and gradual elimination of direct payments. Results show that if direct payments (DP) are eliminated in 2012, a 23% increase in both the target price (TP) and loan rate (LR) triggers counter-cyclical payments (CCP) 80% of the time; and it will take an increase of 48% in TP and LR to generate CCP enough to compensate for the loss in total DP. If DP is gradually removed over 5 years, the trigger and compensatory increases in TP and LR are 41% and 46%, respectively. Furthermore, if DP is eliminated outright and TP maintained, an increase of 71% in LR triggers loan deficiency payments (LDP) 75% of the time; and it will take an increase of 130% in LR to generate enough LDP to recoup the total loss in DP. Under gradual removal of DP, the trigger and compensatory increases in LR are 71% and 92%, respectively.

Keywords: Agricultural and Food Policy; Crop Production/Industries (search for similar items in EconPapers)
Pages: 21
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea12:119772

DOI: 10.22004/ag.econ.119772

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