CHARACTERISTICS OF PANEL FARMS PRODUCING COTTON

TXSP1360 a 1,360-acre Texas Southern High Plains (Dawson County) moderate size cotton farm that grew 812 acres of skip-row cotton in 1994. The farm did not flex any crops and generated all of its receipts from cotton.

TXSP3334 a 3,334-acre Texas Southern High Plains (Dawson County) large cotton farm that grew 2,228 acres of skip-row cotton in 1994. The farm did not flex any crops and generated all of its revenue from cotton.

TXRP1700 a 1,700-acre Rolling Plains of Texas (Jones County) moderate size cotton farm that grew 695 acres of cotton and 490 acres of wheat in 1994. The farm did not flex any base acres and generated about 76 percent of its total revenue from cotton in 1994.

TXRP2500 a 2,500-acre Rolling Plains of Texas (Jones County) large cotton farm that grew 1,018 acres of cotton and 790 acres of wheat in 1994. The farm did not flex any base acres and generated about 76 percent of its revenue from cotton.

TXBL1200 a 1,200-acre Texas Blacklands (Williamson County) moderate size cotton and grain farm with 590 acres of cotton and 540 acres of sorghum in 1994. The farm flexed NFA and OFA sorghum to cotton and generated about 69 percent of its total receipts from cotton.

TXCB1700 a 1,700-acre Texas Coastal Bend (San Patricio County) large cotton farm with 861 acres of cotton and 765 acres of sorghum in 1994. The farm flexed NFA and OFA sorghum to cotton and generated about 79 percent of its total revenue from cotton.

CAC900 a 900-acre Southern San Joaquin Valley California (Kern County) moderate size cotton farm that grew 570 acres of cotton and 225 acres of alfalfa in 1994. The farm did not flex any crops and generated about 73 percent of its total receipts from cotton.

CAC3150 a 3,150-acre Southern San Joaquin Valley California (Kern County) large cotton farm that grew 1,782 acres of cotton and 1,002 acres of alfalfa in 1994. The farm did not flex any crops and generated about 75 percent of its total revenue from cotton.

MSC1635 a 1,635-acre Mississippi Delta (Washington County) moderate size cotton farm that grew 824 acres of cotton and 640 acres of soybeans in 1994. The farm did not flex any crops and generated about 86 percent of its total receipts from cotton.

MSC3620 3,620-acre Mississippi Delta (Washington County) large cotton farm that grew 1,515 acres of cotton and 1,620 acres of soybeans in 1994. The farm did not flex any crops and generated about 81 percent of its revenue from cotton.

Impacts on Cotton Farms

If the current farm program was continued, the average net cash farm income for 9 of the 10 representative cotton farms would be positive for the 1996-2003 period (Figure 7). The level of average annual net cash farm income ranges from $6,000 to $43,000 for the moderate size farms and from -$24,000 to $163,000 for the large farms.

With No Farm Program average annual net cash farm income over the 1996- 2003 period is negative for 4 of the 10 cotton farms (Figure 7). The No Farm Program option is responsible for reducing average annual net cash farm income from $5,000 to $300,000 per year (Tables D10-D14).

The average net cash farm incomes over the 1996-2003 period, is higher under the Marketing Loan Only scenario than the Baseline for 7 of the 10 cotton farms (Figure 7). Absolute variability in average net cash farm income for 1996-2003 is greater for 9 of the 10 cotton farms under the Marketing Loan option than under the Baseline (Tables D10-D14).

Average changes in real ending net worth are negative across all three policy options, for all of the representative cotton farms (Figure 6).

Based on the projected average net cash farm incomes and the changes in real net worth, 7 of the 10 cotton producers would prefer the Marketing Loan Only option over the Baseline. The Marketing Loan Only option would in turn be preferred to the No Farm Program by all ten farms because of the loss in net cash farm income and the increases in income risk associated with the No Program.

Including risk in the farm level analysis resulted in the same policy preferences between the Baseline and the No Farm Program options as observed for the "normal" weather analyses. In the "normal" weather analyses, the Marketing Loan Only scenario was preferred over the Baseline for 8 of the 10 farms. Considering risk makes the Marketing Loan Only option preferred over the Baseline on 7 of the 10 farms. Therefore, including risk in the analysis does not change the preferences reported in the earlier analysis of these policy options.