Impacts of Budget Reconciliation on U.S. Crop Producers

The President has called for a $6.96 billion savings in expenditures to agriculture over a five year period. A budget reconciliation is required to achieve these targeted savings from farm bill authorized expenditures. This study uses optimal control theory and farm level simulation to quantify the impacts on U.S. crop producers of reducing federal spending for agricultural income supports. Results indicate that the least harmful method for the Agricultural Committees to achieve budget savings of $3 billion is to reduce loan rates. At higher levels of net budget savings, some risk adverse decision makers would prefer that the Committees reduce target prices.