Source: TEXAS A&M UNIVERSITY submitted to NRP
DAIRY PROGRAMS OF THE NATIONAL INSTITUTE FOR LIVESTOCK AND DAIRY POLICY
Sponsoring Institution
National Institute of Food and Agriculture
Project Status
COMPLETE
Funding Source
SPECIAL GRANT
Reporting Frequency
Annual
Accession No.
0195160
Grant No.
2003-34201-13230
Cumulative Award Amt.
(N/A)
Proposal No.
2004-06112
Multistate No.
(N/A)
Project Start Date
Jun 15, 2003
Project End Date
Jun 14, 2006
Grant Year
2004
Program Code
[CY]- (N/A)
Recipient Organization
TEXAS A&M UNIVERSITY
750 AGRONOMY RD STE 2701
COLLEGE STATION,TX 77843-0001
Performing Department
AGRICULTURAL ECONOMICS
Non Technical Summary
The 2002 farm bill changed the policy environment that farmers will operate under for the next 5 to 10 years. The new bill may include a new dairy program that will affect the incomes and milk prices for dairy farmers. The purpose of this study is to analyze the economic impacts of the 2002 farm bill on the future viability of dairy, hog and beef cattle operations in major production regions of the United States.
Animal Health Component
50%
Research Effort Categories
Basic
50%
Applied
50%
Developmental
(N/A)
Classification

Knowledge Area (KA)Subject of Investigation (SOI)Field of Science (FOS)Percent
6106030301075%
6106110310025%
Knowledge Area
610 - Domestic Policy Analysis;

Subject Of Investigation
6110 - Economy of the United States and sectors thereof; 6030 - The farm as an enterprise;

Field Of Science
3010 - Economics; 3100 - Management;
Goals / Objectives
(1) Analyze the economic consequences of implementing the 2002 farm bill on the continued competitiveness of U.S. livestock and dairy industries. (2) Respond to questions by House and Senate Ag. Committees on issues for implementing and changing the 2002 farm bill. (3) Analyze consequences of implementing trade agreements on U.S. livestock and dairy industries.
Project Methods
Use econometric and farm level simulation models to analyze alternative policies under risk for representative cattle, hog, and dairy farms in critical production areas of the U.S. Develop and maintain database of representative livestock and dairy farms in the U.S.

Progress 06/15/03 to 06/14/06

Outputs
Data to analyze the economics of representative dairy farms and beef cattle ranches were developed in 2003 and updated in 2005. The resulting 23 dairy farms and 16 cow/calf farms were analyzed using the FLIPSIM model to project the economic viability of dairy and beef cattle operations across the U.S. under a variety of economic conditions. Each year the January FAPRI Baseline was used to project the liquidity, equity and economic viability of the farms for the next 5-6 years. These Baseline studies were presented to the House and Senate Ag Committees, USDA, commodity groups, and the press. Additionally the farm database was used to analyze the economic impacts of the Dohau round negotiations on the viability of U.S. dairy farms and beef cattle ranches.

Impacts
The results of these studies were used by the industry leaders and stakeholders to guide them in requesting policy changes for the next farm bill and for establishing their positions for the Dohau round WTO negotiations. The annual baseline reports to Congress kept the Ag Committees abreast of the probable economic viability of the industry and to act as a barometer of potential problems in the industry.

Publications

  • Outlaw, Joe L., James W. Richardson, Brian K. Herbst, George M. Knapek, David P. Anderson, James D. Sartwelle, III, J. Marc Raulston, Paul Feldman, Keith Schumann, Steven L. Klose, Robert B. Schwart, Jr., and Peter Zimmel. "Representative Farms Economic Outlook for the August 2005 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Working Paper 05-3, September 2005.
  • Richardson, James W., Joe L. Outlaw, David P. Anderson, George M. Knapek, J. Marc Raulston, Brian Herbst, James D. Sartwelle, III, Robert B. Schwart, Jr., Keith Schumann, Paul Feldman, and Steven L. Klose. "Representative Farms Economic Outlook for the August 2005 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 05-2, September 2005.
  • Outlaw, Joe L., James W. Richardson, Brian K. Herbst, George M. Knapek, David P. Anderson, James D. Sartwelle, III, J. Marc Raulston, Paul Feldman, Keith Schumann, Steven L. Klose, Robert B. Schwart, Jr., Peter Zimmel. "Representative Farms Economic Outlook for the December 2005 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Working Paper 05-4, December 2005.
  • Richardson, James W., Joe L. Outlaw, David P. Anderson, George M. Knapek, J. Marc Raulston, Brian Herbst, James D. Sartwelle, III, Robert B. Schwart, Jr., Paul Feldman, Steven L. Klose. "Representative Farms Economic Outlook for the December 2005 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 05-6, December 2005.
  • Outlaw, Joe L., James W. Richardson, Brian K. Herbst, George M. Knapek, David P. Anderson, James D. Sartwelle, III, J. Marc Raulston, Steven L. Klose, Peter Zimmel. "Representative Farms Economic Outlook for the January 2006 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Working Paper 06-1, February 2006.
  • Richardson, James W., Joe L. Outlaw, George M. Knapek, J. Marc Raulston, Brian Herbst, James D. Sartwelle, III, David P. Anderson, Steven L. Klose. "Representative Farms Economic Outlook for the January 2006 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 06-1, February 2006.


Progress 01/01/05 to 12/31/05

Outputs
The January 2005 FAPRI Baseline was used to develop a Baseline projection for the 21 representative dairy farms and 13 cow/calf operations. The dairy farms and beef operations were updated by meeting with the panel farmers and/or indexing costs with relevant inflation factors.

Impacts
The January 2005 Baseline projections for the 21 representative dairy farms indicates ten of the dairy farmers will face moderate to severe cash flow problems for 2005-2009. Thirteen of the 21 representative dairy farms will have less than a 25% chance of cash flow deficits over the 2005-2009 period. Cash flow deficits will likely be a major problem for the nations cow/calf operations as well. Six of the 13 representative beef cow operations will have greater than a 25% chance of a cash flow deficits over 2005-2009.

Publications

  • Richardson, James W., Joe L. Outlaw, David P. Anderson, George M. Knapek, J. Marc Raulston, Brian Herbst, James D. Sartwelle, III, Robert B. Schwart, Jr., Keith Schumann, Paul Feldman, and Steven L. Klose. 2005. Representative Farms Economic Outlook for the January 2005 FAPRI/AFPC Baseline. Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 05-1, January 2005.
  • Outlaw, Joe L., James W. Richardson, Brian K. Herbst, George M. Knapek, David P. Anderson, James D. Sartwelle, III, J. Marc Raulston, Paul Feldman, Keith Schumann, Steven L. Klose, Robert B. Schwart, Jr., and Peter Zimmel. 2005. Representative Farms Economic Outlook for the August 2005 FAPRI/AFPC Baseline. Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Working Paper 05-3, September 2005.
  • Richardson, James W., Joe L. Outlaw, David P. Anderson, George M. Knapek, J. Marc Raulston, Brian Herbst, James D. Sartwelle, III, Robert B. Schwart, Jr., Keith Schumann, Paul Feldman, and Steven L. Klose. 2005. Representative Farms Economic Outlook for the August 2005 FAPRI/AFPC Baseline. Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 05-2, September 2005.
  • Sartwelle, J.D. III, D.P. Anderson, J.L. Outlaw, and J.W. Richardson. 2005. Relating Beef By-Product to Live Cattle Prices. Presented paper for Southern Agricultural Economics Association Annual Meeting, Little Rock, Arkansas, February 5-9, 2005.
  • Ribera, Luis Alejandro Landives. 2005. Econometric Model of the U.S. Sheep and Mohair Industries for Policy Analysis. Department of Agricultural Economics, Texas A&M University, Ph.D. Dissertation, May 2005.


Progress 01/01/04 to 12/31/04

Outputs
The January 2004 FAPRI Baseline was used to develop a Baseline projection for the 23 representative dairy farms, 13 cow/calf operations and four hog farms. The dairy farms and beef operations were updated by meeting with the panel farmers and/or indexing costs with relevant inflation factors. The project sponsored a conference on "Dairy Policy and Product Innovation," the 11th Annual Workshop for Dairy Economists and Policy Analysts. The conference was attended by more than 80 of the nations leading dairy economists and industry leaders. The impacts of dairy policy changes on the industry and federal budget constraints on dairy policy were leading topics at the conference. Two papers on "Large Farm Issues: Payment Limits" and "Large Farm Issues: Producer-Handlers" drew heavily on the representative dairy farm data base and the farm level modeling capabilities developed and maintained under this project.

Impacts
The January 2004 Baseline projections for the 23 representative dairy farms indicates the majority of dairy farmers will face moderate to severe cash flow problems for 2004-2009. Sixteen of the 23 representative dairy farms will have greater than a 25% chance of cash flow deficits over the 2004-2009 period. Cash flow deficits will likely be a major problem for the nations cow/calf operations as well. Ten of the 13 representative beef cow operations will have greater than a 25% chance of a cash flow deficits over 2004-2009.

Publications

  • Outlaw, Joe L., James W. Richardson, Brian K. Herbst, David P. Anderson, James D. Sartwelle, III, J. Marc Raulston, Paul Feldman, Keith Schumann, Steven L. Klose, Robert B. Schwart, Jr., and Peter Zimmel. 2004. Representative Farms Economic Outlook for the January 2004 FAPRI/AFPC Baseline. Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Working Paper 04-1.
  • Richardson, James W., Joe L. Outlaw, David P. Anderson, J. Marc Raulston, Brian Herbst, James D. Sartwelle, III, Robert B. Schwart, Jr., Keith Schumann, Paul Feldman, and Steven L. Klose. 2004. Representative Farms Economic Outlook for the December 2004 FAPRI/AFPC Baseline. Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 04-4.
  • Outlaw, Joe L., J. Marc Raulston, James W. Richardson, James D. Sartwelle, III, and Brian K. Herbst. 2004. Economic Outlook for Texas Representative Cotton Farms Given the August 2004 FAPRI/AFPC Baseline. Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Working Paper 04-4.
  • Outlaw, Joe L., James W. Richardson, Brian K. Herbst, David P. Anderson, James D. Sartwelle, III, J. Marc Raulston, Paul Feldman, Keith Schumann, Steven L. Klose, Robert B. Schwart, Jr., and Peter Zimmel. 2004. Representative Farms Economic Outlook for the December 2004 FAPRI/AFPC Baseline. Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Working Paper 04-5.
  • Richardson, James W., Joe L. Outlaw, David P. Anderson, J. Marc Raulston, Brian Herbst, James D. Sartwelle, III, Robert B. Schwart, Jr., Keith Schumann, Paul Feldman, and Steven L. Klose. 2004. Representative Farms Economic Outlook for the January 2004 FAPRI/AFPC Baseline. Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 04-1.


Progress 01/01/03 to 12/31/03

Outputs
The January 2003 and December 2003 FAPRI Baselines were used with the Ag and Food Policy Center's representative farm data base to project the economic well being of dairy, beef cattle, and hog farms over the 2002-2008 period, the life of the 2002 farm bill. The baseline reports were presented to the House and Senate Ag Committee staffers, to economists in USDA and to commodity group leaders. This year's research activities on dairy included the National Dairy Economists Workshop. AFPC economists conducted research on structural change in the industry. AFPC conducted research on the farm level impact of incremental changes in dairy policy. Dairy policy includes a number of tools including the dairy price support program, dairy export incentive program, and the federal milk marketing order system. Incremental changes in policy, modeled by dropping one program at a time and in different combinations were used to examine the differential impacts of their elimination on dairy farms around the country. Research in beef cattle involved estimating the economic impact of Country of Origin Labeling on the South Texas cattle industry. AFPC economists also aided in research estimating the costs of complying with COOL for the beef industry. The Canadian BSE, bioterrorism, and other disease issues has moved animal identification issues to the forefront. In response to these issues, AFPC economists have developed materials and research to aid producers in understanding those issues and how they may plan accordingly.

Impacts
The December AFPC/FAPRI Baseline projects that 14 of the 23 representative dairy farms will have significant cash flow deficits over the 2004-08 period. Once again cash flow deficits are disproportionately experienced by smaller farms. The cash flow deficits are projected to become so severe that 8 of the 23 representative farms are projected to have greater than a 25 percent chance of losing real net worth. Most all of the representative cattle and hog farms monitored by AFPC will suffer severe cash flow deficits over the 2004-08 planning horizon. The four hog farms AFPC monitors will have greater than a 80 percent chance of cash flow deficits by 2008. Despite how bad this looks, all of the representative farms have a more positive outlook for the 2003 December Baseline than the 2003 January Baseline.

Publications

  • Richardson, James W., Joe L. Outlaw, David P. Anderson, James D. Sartwelle, III, Paul Feldman, Keith Schumann, J. Marc Raulston, Steven L. Klose, Robert B. Schwart, Jr., and Peter Zimmel. "Representative Farms Economic Outlook for the January 2003 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Working Paper 03-1, March 2003.
  • Richardson, James W., Joe L. Outlaw, David P. Anderson, James D. Sartwelle, III, Robert B. Schwart, Jr., Keith Schumann, Paul Feldman, J. Marc Raulston, and Steven L. Klose. "Representative Farms Economic Outlook for the January 2003 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 03-1, March 2003.
  • Richardson, James W., Joe L. Outlaw, David P. Anderson, J. Marc Raulston, Brian Herbst, James D. Sartwelle, III, Robert B. Schwart, Jr., Keith Schumann, Paul Feldman, and Steven L. Klose. "Representative Farms Economic Outlook For The December 2003 FAPRI/AFPC Baseline." Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University, Department of Agricultural Economics, Agricultural and Food Policy Center Briefing Paper 03-3, December 2003.