Saturday, October 14, 2006

Farm Programs Lead to Higher Prices?

Not necessarily, but they aren't absolutely correlated with lower prices either. (This follows up a comment at Dan Drezner's blog that, contra another commenter, the farm programs did not necessarily lead to higher production and lower prices. )

From an Agweb post (note the last paragraph):

USDA will soon begin issuing first partial 2006-crop-year counter-cyclical payments for producers with base acres enrolled in USDA's Direct and Counter-cyclical Program (DCP). The 2002 Farm Bill requires that these payments be made in October.

The 2006-crop-year projected first partial payment rates, equal to 35 percent of the total projected amount, are $0.0481 per pound for upland cotton and $30.45 per short ton for peanuts

First installment payments are not available for producers who have wheat, corn, grain sorghum, barley, oats, rice, soybeans and other oilseeds base acres because the effective prices for those crops equal or exceed their respective target prices.

The point is that commodity prices are still volatile.

No comments: