Farm Blog Week 12 - Governing Agriculture

Current expansion in ethanol production is underway in the United States, which was spurred by high oil prices and energy policies.  Corn is the primary feedstock used to produce ethanol in the United States, market adjustments to the ethanol expansion extend well beyond the corn sector. Changes in the agricultural sector is to increase demand for biofuels and will continue as interest in renewable sources of energy grows. Although cellulosic-based production of renewable fuels holds some long term promise, a lot of research is needed to make it commercially economical and expand beyond the 250-million-gallon minimum specified for 2013 in the Energy Policy Act of 2005.

Pricers for corn and other crops are looking at higher prices which means smaller government payments under the current farm commodity programs.  This mainly affects the loan benefits and counter cyclical payments.  With higher crop prices that makes the land more valuable.  So rental rates for newer land enrolled in the CRP are more than likely to rise.  Conservation payments and fixed direct payments, under the 2002 Farm act are projected to account for a larger share of total direct government payments, but know that the farm act does not change with the market prices.

Overall, ethanol expansion will boost net farm income. Higher commodity prices over the next several years, particularly for corn and soybeans, are projected to bring large increases in total farm cash receipts. But to some extent, these gains are expected to be offset by somewhat higher production expenses for inputs such as seed, fertilizer, and livestock feed.










https://www.ers.usda.gov/amber-waves/2007/september/us-ethanol-expansion-driving-changes-throughout-the-agricultural-sector/