Economic Conditions for Selected Panel Farms:
The Impact of Market Loss Assistance

Congressional Briefing
Washington, DC
November 10, 1998

Ron Knutson
James Richardson
Ed Smith
David Anderson

Agricultural and Food Policy Center
Department of Agricultural Economics
Texas Agricultural Experiment Station
Texas Agricultural Extension Service
Texas A&M University

College Station, Texas 77843-2124
Telephone: (409) 845-5913

Definition of Terms

Change in Net Cash Farm Income from 1997 to 1998

Average net cash farm incomes for 1997 and 1998 were simulated using updated mean yields for the farms based on NASS reported yields and/or land grant specialists estimates. The 1998 net cash farm incomes were simulated with and without the added market loss assistance (49.72% of 1998 AMTA) payments. Net cash farm income is defined as total cash receipts including government payments insurance indemnity payments minus total cash production and interest expenses. Farms were covered by MPCI at the 50 percent yield and 100 percent price election levels.

Probability of Deficit in 1998

A deficit occurs when ending year cash reserves are negative; indicating that total cash outflows for principal payments, taxes and family living exceed net cash farm income. The probability of a deficit reflects the chance that the farm will have to either refinance its cash flow deficit or meet the deficit by drawing on cash reserves.

1998 Market Assistance Loss Added AMTA Payment

This value equals the increase in AMTA payments authorized and appropriated for 1998. The 1998 market assistance loss payment equals 49.72% of the 1998 AMTA payments for each program crop.

No. of Disasters 1996-1998

The number of disasters is the number of years out of the past three that net cash farm income dropped below trend income levels by more than 25 percent.

Legend for Colors

Change in Net Cash Farm Income: Red (horizontal shading) indicates a decrease greater than 50 percent, yellow (gray shade) is a decrease from 20 to 50 percent, and green (diagonal shading) is less than a 20 percent decrease.
Probability of Deficits in 1998: Red indicates a probability greater than 50 percent, yellow is a probability of 20 to 50 percent, and green is a probability of less than 20 percent.
Outlook: Authors' interpretation of the economic and financial status of the farm after examining the projections through the 2002 production year. Red indicates the farm will likely not succeed with its current operation. Yellow indicates the farm may succeed but it is financially vulnerable. Green indicates a strong probability that the farm will be successful through the 1996 farm bill era.

Outlook for Representative Farms,


Appendix Tables