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Has Price Behavior of Major Farm Programs Changed Since FAIR?

by Carl R. Zulauf, McCormick Professor of Agricultural Marketing and Policy, Ohio State Univeristy; Matthew C. Roberts, Assistant Professor, Ohio State Univeristy; and Abigail G. Boor Masters Student, University of Arizona

Background discussion has begun on the next farm bill. A key issue is the behavior of prices. In general average annual prices of the eight major farm program crops are lower during the period since the Federal Agriculture Improvement and Reform Act of 1996 (FAIR) was enacted than during the pre-FAIR period containing the 1974/75 – 1995/96 crop years. In contrast, price variability does not differ statistically between the two periods. However, caution is in order as the variability of yield has been smaller for seven of the eight crops in the post-FAIR period. The decline in yield variability exceeds 50% for corn, cotton, and oats.

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