Working Paper 96-2

REPRESENTING RICE FARMS ECONOMIC
OUTLOOK: FAPRI/AFPC
DECEMBER 1995 BASELINE

AFPC Working Paper 96-2

Edward G. Smith
James W. Richardson
Joe L. Outlaw
Ronald D. Knutson
Allan W. Gray
Steven L. Klose
John W. Miller

Department of Agricultural Economics
Texas Agricultural Experiment Station
Texas Agricultural Extension Service
Texas A&M University

February 1996

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

REPRESENTATIVE RICE FARMS ECONOMIC
OUTLOOK: FAPRI/AFPC
DECEMBER 1995 BASELINE

Introduction

The farm level economic impacts of the Agricultural Market Transition Act of 1995 (AMTP) on representative rice farms are projected in this report. The analysis was conducted over the 1996-2002 planning horizon using AFPC's whole farm simulation model. Data to simulate eight rice farming operations in the United States' major production regions came from two sources:

Producer panel interviews to develop economic information to describe the representative rice farms.
Projected prices from the Food and Agricultural Policy Research Institute (FAPRI) December 1995 Baseline.

The primary objective of the analysis is to determine the rice farms' economic viability by region over the next seven years, as the AMTP is implemented.

This report is organized into four sections. The first section summarizes the provisions of the AMTP, the panel farm process, key assumptions for the farm level analysis, and a map showing where the rice panel farms are located. The second section summarizes the FAPRI December 1995 Baseline and the policy and price assumptions used for the rice panel farm analyses. The third section presents the results of the simulation analyses for each of the eight rice farms. Three appendices constitute the final section of the report. Appendix A summarizes the characteristics for each of the representative farms. Appendix B includes the definitions of financial variables used to describe the economic impacts on the representative farms and Appendix C provides the names of farmers and land grant faculty who cooperated in the panel farm process.

Provisions of the AMTP

Provisions in the 1995 AMTP which were important to the rice farm level analysis are summarized in Table 1. Major changes from the 1990 farm bill included elimination of target prices to calculate income support payment rates, decoupling of income support payments, allowing increased flexibility in planting decisions, and eliminating acreage reduction program (ARP) authority.

Transitional Income support payments will be made to rice producers based on 85 percent of their historical base acreage times farm program yield times a fixed payment rate to be determined based on the number of producers (eligible production) who enroll in the program and the pool of money available each year for the particular crop.

Planting flexibility was increased from the 15 percent NFA and 10 percent OFA for the 1990 farm bill to 100 percent (Table 1). Producers would be allowed to plant any combination of program and non-program crops (excluding vegetables) on their farmland without the loss of fixed payments. The 50/85 provisions in the 1990 farm bill are eliminated under the AMTP as producers would be eligible to receive their fixed payments and not produce a crop, which is roughly equivalent to a 0/100 program.

Panel Farm Process

AFPC has developed and maintains data to simulate 72 representative crop and livestock farms chosen from major production areas across the United States. Eight of the representative farms are rice dependent (Figure 1). Characteristics for each of the rice farms in terms of size, crop mix, assets, and average receipts are summarized in Appendix A.

The location of these farms was the result of discussions with staffers for the House and Senate Agriculture Committees. Information necessary to simulate the economic activity on these representative farms was developed from panels of producers using a consensus building interview process. Two farms were developed in California, Texas and Missouri using separate panels of producers: one panel is representative of moderate size full-time farm operations, while the second panel represents farms that are two to three times larger. A single panel farm representative of moderate scale operations was developed in Arkansas and in Louisiana.

The data collected from the panel farms are analyzed in a whole farm simulation model (FLIPSIM) that was developed by AFPC and has been refined for more than a decade. Following the panel interview, the producers are provided pro-forma financial statements for their representative farm and are asked to verify the accuracy of the model's results for the past year and the reasonableness of a four or five year projection. Each panel must approve of the model's ability to project economic activity for their representative farm prior to using the farm for policy analyses.

All farms used for this analysis have been updated with the panels through 1992; using 1992-94 indices for input costs, the input data were indexed to 1994 conditions. Actual yields and prices reflective of the representative farms' locations for 1994/95 are utilized for the present analyses. FAPRI projections of prices and yields for 1996-2002 are utilized for the baseline analyses. All of the rice farms are assumed to begin 1994 with 20 percent intermediate- and long-term debt, based on information provided by ERS-USDA and the panel members.

Key Assumptions

The farms participate in the farm program and take advantage of increased flexibility provisions in the AMTP (within the current crop mix). Crop acreage changes from 1995 to 1996 and beyond were estimated based on projected net returns for each of the enterprises currently produced on the farms.
The farms were structured so government payment limits were not effective at reducing transition and marketing loan payments.
Family living withdrawals were assumed at a minimum base rate of 10 percent of gross receipts or $25,000 annually (maximum $100,000) with the farm subject to owner/operator federal and state income taxes as a sole proprietor.
No off-farm-related income was included in the analyses.
Farm program parameters, average annual prices, yield trends, interest rates, and input cost inflation (deflation) are based on the FAPRI December 1995 Baseline which assumed implementation of the AMTP.

FAPRI December 1995 Baseline

Projected commodity prices, input inflation rates and interest rates, for FAPRI's December 1995 baseline are summarized in Table 2. Assumed loan rates and annual decoupled payment rates under the farm program are summarized in Table 3. FAPRI estimated that the fixed annual payment rates for rice are projected to be $1.75/cwt. in 1996; increases to $2.69/cwt. in 1997 and declines to $2/cwt in 2002. The panel farm process is based on a farming system rather that an individual crop, so prices and transition payments are included for other crops grown on the farms.

Table  2.  Projected Crop Prices, Assumed Rates of Change in Input Prices,
           and Annual Intererange
___________________________________________________________________________

                     1996    1997    1998    1999    2000    2001    2002
___________________________________________________________________________


Crop Prices
Corn ($/bu.)         2.45    2.35    2.21    2.26    2.26    2.32    2.28

Wheat ($/bu.)        3.48    3.16    3.35    3.39    3.23    3.18    3.24

Cotton ($/lb.)       0.6446  0.6134  0.6217  0.6129  0.6179  0.6102  0.5971

Soybeans ($/bu.)     6.50    6.09    5.84    5.69    5.85    5.83    5.73

Rice ($/cwt.)        7.29    7.23    7.30    7.36    7.62    7.61    8.03


Cattle Prices
Feeder Cattle       68.38   69.05   73.62   80.75   89.29   96.84  101.70
  ($/cwt)
Culled Cows ($/cwt) 34.48   34.73   36.54   41.87   45.61   52.49   54.42


Average Annual Rate of Change in Variable Cash Expenses
Corn (%)             0.68    0.66    1.74    1.82    2.03    1.82    1.70

Wheat (%)            2.03    0.51    1.23    2.16    2.47    2.10    1.98

Cotton (%)           2.82    1.20    1.69    1.93    2.13    2.21    2.21

Soybeans (%)         1.30    1.19    1.52    1.41    1.67    1.54    1.58

Rice (%)             1.33    1.41    1.75    2.14    2.37    2.16    2.11

Cattle (%)           0.49    0.49    0.74    1.01    1.31    1.26    1.28


Annual Interest Rate
Long-Term (%)        7.67    7.40    7.45    7.39    7.41    7.38    7.30

Intermediate-Term (%)7.90    7.75    8.06    8.17    8.18    8.06    7.70

Savings Account (%)  3.90    3.75    4.06    4.17    4.18    4.06    3.70
___________________________________________________________________________
Source: Food and Agricultural Policy Research Institute (FAPRI) at the
        University of Missouri-Columbia and Iowa State University.

Table  3.  Projected Fixed Payment Rates and Loan Rates
___________________________________________________________________________

                    1996    1997    1998    1999    2000    2001    2002
___________________________________________________________________________


Fixed Payment Rates
 Corn ($/bu.)       0.2698  0.3730  0.4009  0.3864  0.3531  0.2842  0.2756

Wheat ($/bu.)       0.6771  0.6435  0.6843  0.6564  0.5971  0.4803  0.4656

Cotton ($/lb.)      0.0795  0.0761  0.0817  0.0788  0.0720  0.0579  0.0561

Rice ($/cwt.)       1.7474  2.6919  2.8985  2.7982  2.5620  2.0662  2.0012


Loan Rates
 Corn ($/bu.)       1.89    1.89    1.89    1.89    1.89    1.85    1.84

Wheat ($/bu.)       2.58    2.58    2.58    2.58    2.58    2.58    2.58

Cotton ($/lb.)      0.5192  0.5192  0.5192  0.5192  0.5192  0.5192  0.5192

Soybeans ($/bu.)    4.92    4.92    4.92    4.92    4.92    4.92    4.92

Rice ($/cwt.)       6.50    6.50    6.50    6.50    6.50    6.50    6.50
___________________________________________________________________________
Source: Food and Agricultural Policy Research Institute (FAPRI) at the
        University of Missouri-Columbia and Iowa State University.

Farm Level Impact of AMTP

Each of the eight rice panel farms were analyzed under the AMTP provisions for the seven year period 1996-2002 under the assumption previously discussed. Each farm is briefly described in Table 4. Detailed financial data by year and averaged over the period are included for each farm in Table 5. The financial variables included in the table are defined in Appendix B.

California - Both the moderate and large scale California rice farms lose real earned equity over the 1996-2002 study period (Table 5 and Figure 2). The moderate scale farm experiences a loss in real equity of 6.4 percent although nominal net worth increases. The large farm loses 36.6 percent of its real earned equity. Nominal equity also declines on this farm. It is estimated that increasing annual net income the equivalent of 2 percent of receipts for the moderate size farm and 8 percent of receipts for the large farm would, on average, prevent the loss of real net worth (Figure 2). This annual change in receipts to maintain net worth is referred to as the farm's net income adjustment (NIA).

The Agricultural and Food Policy Center (AFPC) considers both farms to be managerially capable of sustaining real equity over the period because the NIA's are less than 10 percent. When the NIA is less than 10 percent we feel that net cash farm income (NCFI) can be improved sufficiently, through better marketing, better input management, or a combination of both (Table 5 and Figure 2).

Table 4. CHARACTERISTICS OF PANEL FARMS PRODUCING RICE

_________________________________________________________________________

CAR424	a 424-acre Sacramento Valley California (Sutter and Yuba Counties) moderate size rice farm that planted 380 acres of rice in 1995. The farm did not plant its nonpaid flex acres and received all of its revenue from rice. Under normal weather conditions this farm expects to produce 82 hundred weights of medium grain rice per acre.
CAR1300	a 1,300-acre Sacramento Valley California (Sutter and Yuba Counties) large rice farm that planted 960 acres of rice in 1995. The farm flexed the NFA rice base acres to idle and generated all of its revenue from rice. Under normal weather conditions this farm expects to produce 81 hundred weights of medium grain rice per acre.
TXR2118	a 2,118-acre West of Houston, Texas (Wharton County) moderate size rice farm that planted 565 acres of rice in 1995. The farm flexed the NFA rice base acres to idle and received 98 percent of its revenue from rice. A recent update on this farm indicated a yield improvement of 500 lbs of rice per acre due to a change in variety of rice planted. Under normal weather conditions this farm expects to produce 76 hundred weights of long grain rice per acre.
TXR3750	a 3,750-acre West of Houston, Texas (Wharton County) large rice farm that planted 1,412 acres of rice, 200 acres of hay and had 200 head of cattle in 1995. The farm flexed the NFA rice base acres to idle and received 95 percent of its revenue from rice. This farm also realized almost a 500 pound per acre improvement in rice yields due to a change in variety. Under normal weather conditions this farm expects to produce 73 hundred weights of long grain rice per acre.
MOR1900	a 1,900-acre Southeastern Missouri (Butler County) moderate size rice farm with 480 acres of rice, 691 acres of corn, and 650 acres of soybeans planted in 1995. The farm flexed NFA rice base acres to corn and generated about 40 percent of its total revenue from rice. Under normal weather conditions this farm expects to produce 57 hundred weights of long grain rice per acre.
MOR4000	a 4,000-acre Southeastern Missouri (Butler County) large rice farm with 960 acres of rice, 300 acres of cotton, 1,020 acres of corn, and 1,600 acres of soybeans planted in 1995. The farm flexed NFA rice base to corn and NFA cotton base to corn. The farm generated about 41 percent of its gross receipts from rice. Under normal weather conditions this farm expects to produce 59 hundred weights of long grain rice per acre.
ARR1260	a 1,260-acre Arkansas (Poinsett County) moderate size rice farm that planted 573 acres of rice, 123 acres of wheat, and 558 acres of soybeans in 1995. The farm did not flex rice. The farm flexed NFA wheat acreage to rice. The farm generated about 72 percent of its revenue from rice. Under normal weather conditions this farm currently expects to produce 65 hundred weights of medium grain rice per acre and 60 hundred weights of long grain rice per acre. Initial investigation has concluded that this farm may have recognized an improvement in yields similar to Texas but updates have not yet been conducted.
LAR1100	a 1,100-acre Louisiana (Jefferson Davis, Acadia, and Vermilion Parishes) moderate size farm that planted 475 acres of rice and 400 acres of soybeans in 1995. The farm did not flex rice to another crop and generated about 81 percent of its revenue from rice. Under normal weather conditions this farm currently expects to produce 59 hundred weights of medium and long grain rice per acre. The expected yield reflects a 400 pound per acre improvement since the farm was previously updated.

_________________________________________________________________________


Table 5.  Implications of the Agricultural Market Transition Program (1995 Farm Bill) and December 1995 FAPRI Baseline on the Economic Viability
          of Representative Farms that Primarily Produce Rice.
___________________________________________________________________________________

                CAR424  CAR1300 TXR2118  TXR3750  MOR1900  MOR4000  ARR1260 LAR1100
___________________________________________________________________________________

Change in Real Net Worth w/o Land
Inflation 1996-2000-6.35 -36.57    9.79   -22.09     3.93     3.98  -22.88  -69.81

Change in Real Net Worth
1996-2002 (%)     3.40   -23.90   16.07   -11.42     5.41    10.28  -19.60  -68.25

Government Payments to Receipts (%)
1996-2002 Avg.   24.43    23.69   25.34    23.24    13.58    13.56   17.79   18.09

Expenses to Receipts (%)
1996-2002 Avg.   82.77    99.34   82.51    96.81    81.27    82.19   89.21   89.84

Average Cash Receipts ($1000)
          1996  297.61   905.52  401.30  1158.85   556.87  1443.94  449.67  266.00
          1997  313.80   951.46  434.95  1244.07   561.86  1446.01  459.33  274.55
          1998  324.35   983.03  442.96  1268.96   571.64  1475.97  468.21  277.90
          1999  316.10   958.15  432.89  1244.40   564.30  1450.40  457.69  275.31
          2000  310.26   941.20  430.58  1251.79   572.85  1486.03  465.20  278.52
          2001  308.88   938.84  420.38  1231.86   564.22  1454.27  452.34  270.79
          2002  315.51   959.35  426.88  1240.62   576.16  1486.25  457.78  275.02
1996-2002 Avg.  312.36   948.22  427.13  1234.37   566.84  1463.27  458.60  274.01

Average Net Cash Income ($1000)
          1996   60.15    37.19   62.41    41.99   121.42   295.31   60.49   41.20
          1997   71.09    66.95   92.58   104.76   118.39   286.59   67.11   46.09
          1998   73.34    79.68   97.87   114.09   126.89   301.80   72.50   47.11
          1999   61.95    35.21   85.57    58.91   115.39   256.67   58.69   33.11
          2000   47.15    -9.52   78.45    41.75   110.44   268.49   53.33   29.36
          2001   42.10   -40.75   61.32    -8.76    91.13   228.63   30.03    6.10
          2002   38.25   -60.80   63.18   -20.59    85.16   245.39   18.75   -1.40
1996-2002 Avg.   56.29    15.42   77.34    47.45   109.83   268.98   51.56   28.80

Average Government Payments ($1000)
          1996   66.92   198.30   94.79   253.97    65.75   170.65   72.37   44.65
          1997   84.94   249.85  121.17   320.77    84.84   217.38   91.12   55.50
          1998   86.25   253.06  123.51   326.29    88.19   226.84   92.65   56.15
          1999   87.92   258.57  125.55   332.28    90.23   231.16   95.02   57.97
          2000   77.04   226.15  110.10   291.25    78.58   202.83   82.82   50.27
          2001   66.76   196.57   95.50   253.63    67.18   173.87   72.16   44.12
          2002   56.00   163.83   80.19   210.91    58.18   153.60   60.90   36.44
1996-2002 Avg.   75.12   220.90  107.26   284.16    76.13   196.62   81.00   49.30

Average Total Debt ($1000)
          1996  110.50   375.05   67.98   349.44   260.11  1222.06  337.84   49.85
          1997  135.66   376.47   57.96   322.14   198.65  1142.80  300.06   35.04
          1998  115.99   373.90   49.26   420.27   182.99  1104.75  267.60  107.15
          1999  132.73   401.02   56.24   421.64   227.40  1014.09  317.32  111.61
          2000  112.69   494.02   67.17   487.29   245.80   867.93  355.89  216.06
          2001  114.10   593.12   55.97   517.18   330.71   765.44  465.17  297.77
          2002  196.48   726.14   78.97   667.02   314.66   735.46  511.68  331.47
1996-2002 Avg.  131.16   477.10   61.94   455.00   251.47   978.93  365.08  164.13

Average Nominal Net Worth ($1000)
          1996  550.42  1258.50  446.06  1490.71   973.09  4253.67  959.81  242.54
          1997  578.25  1276.09  482.25  1542.50   998.39  4424.89  971.01  242.30
          1998  599.83  1307.18  520.59  1637.34  1047.92  4591.86  987.93  248.93
          1999  621.02  1307.65  544.05  1618.92  1091.82  4754.53 1001.59  230.88
          2000  623.71  1269.86  563.86  1622.31  1116.95  4875.67  977.88  219.08
          2001  630.43  1194.29  572.73  1587.81  1131.21  5005.88  943.07  163.49
          2002  631.63  1102.64  581.88  1515.73  1116.67  5139.94  887.13   88.03
1996-2002 Avg.  605.04  1245.17  530.20  1573.62  1068.01  4720.92  961.20  205.04

NIA for Real Net Worth w/o Land Inflation 1996-2002
in $ ($1000)      6.82    79.06   -8.30    50.93    -6.63   -29.10   35.50   25.90

NIA for Real Net Worth w/o Land Inflation 1996-2002
as % Receipts (%) 2.18     8.34   -1.98     4.19     1.17    -1.99    7.76    9.56

NIA for Total Real Net Worth 1996-2002
in $ ($1000)     -3.35    49.49  -12.91    25.92   -10.00   -73.82   30.00   25.30

NIA for Total Real Net Worth 1996-2002
as % Receipts (%)-1.07     5.22   -3.07     2.13    -1.76    -5.05    6.56    9.34
___________________________________________________________________________________

Although the farm on average may be characterized as managerially capable, averages for net worth and net income can be somewhat misleading. This appears to be the case on the California operations. A graph of the trends in NCFI (Figure 3) indicate a significant drop in farm income after 1998 as transitions payments erode and prices do not recover enough to offset the loss in government payments and increased production costs. In fact all of the loss in real equity on the moderate scale farm occurs after the year 2000.

The large scale operation is losing real equity throughout the study period but the loss is disproportionately weighted to the last 3 years. Over 70 percent of the equity loss on this farm occurs after 1999 as NCFI goes negative.

Texas - The Texas farms follow pretty much the same pattern as discussed for California, with the exception that the moderate scale Texas farm experiences a slight increase in real earned equity, less than 10 percent (Table 5). The large scale farm loses approximately 22 percent of its' real earned equity over the study period (Figure 2 and Table 5). The large farm, however, has a NIA of less than 5 percent so it is characterized as being managerially capable of sustaining real equity.

Although both farms could likely sustain real equity over the study period the trend in NCFI is disturbing (Figure 3). Net cash farm income on both Texas rice farms peaks in 1998 and then declines throughout the remainder of the study period. The large Texas rice farm experiences negative NCFI after 2000. Approximately 50 percent of the real equity loss experienced by the large rice farm occurs in the last two years of the study period.

Missouri - Both Missouri farms experience a modest 4 percent growth in real earned equity over the study period (Table 5 and Figure 2). The trend in NCFI reveals that while both farms experience declines after 1998 the drop is less severe than projected for the other six represented rice farms (Figure 4).

The Missouri rice farms depend on rice for approximately 40 percent of their gross revenue (Appendix A). While this is the largest commodity contribution to gross revenue on the operations, it is modest compared to the dependence on rice by the other six farms (from 80 to 100 percent). Thus, the Missouri farms are buffered somewhat from the adverse NCFI trends experienced by the other farms that are more dependent on rice.

Arkansas - The Arkansas farm loses approximately 23 percent of its real earned equity over the study period (Table 5 and Figure 2). With a NIA of less than 8 percent the farm would be classified managerially capable of sustaining its real net worth. However, as with the other heavily dependent rice farms, the trend in net cash farm income is a concern.

The Arkansas farm experiences a decline in NCFI each year after 1998. Approximately 60 percent of the loss in real equity on the farm occurs after the year 2000.

Louisiana - The Louisiana farm is the hardest hit of the eight rice farms included in the analysis. The farm loses approximately 70 percent of its' real equity by the year 2000 (Table 5 and Figure 2). The NIA approaches 10 percent, suggesting the farm will have difficulty surviving without a major restructuring of the operation.

The farms' NCFI declines after 1998, as do all the rice farms, but because the farm's NCFI level is not sufficient to sustain a $25,000 family living requirement, as well as make principal payments and machinery replacement, the farm will experience large cash flow deficits each year. The farm is basically put out of business in the last two years of the study period as debt accumulates from refinancing cash flow deficits. Seventy five percent of the loss in real equity occurs after 2000.

Conclusion

While seven of the eight rice farms are considered managerially capable of sustaining real equity over the 1996-2002 study period, the trends in net cash farm income are disturbing. All farms experience a cost price squeeze that will erode NCFI after 1998 and substantially decrease NCFI after year 2000. This decline in NCFI is brought about by a combination of factors. Rice market price increases in the latter years of the study period but not enough to offset the decline in farm program transition payments and increased production costs. As farms experience cash flow problems, refinancing carryover operating debt increases debt service requirements and further reduces NCFI. These factors combine to cause most of the farms to experience major equity loss is in the last two years of the study period.

The Louisiana farm definitely will have to restructure its operation to stay in business. The other seven farms will also have to make adjustments to survive after 1999.

APPENDIX A:
CHARACTERISTICS OF
REPRESENTATIVE FARMS

Appendix A:   Characteristics of Panel Farms in California, Texas, Missouri, Arkansas, and
              Louisiana Producing Rice.
___________________________________________________________________________________________

                 CAR424  CAR1300  TXR2118   TXR3750   MOR1900   MOR4000  ARR1260  LAR1100
___________________________________________________________________________________________

County            Sutter   Yuba   Wharton   Wharton    Butler    Butler  Poinsett  Acadia

Total Cropland     424     1300     2118      3750      1900      4000     1260     1100
 Acres Owned       212      500      318      1688       200      2000      440       50
 Acres Leased      212      800     1800      2062      1700      2000      820     1050

Pastureland
  Acres Owned        0        0        0       200         0         0        0        0

Assets
 Total             663     1627      546      1815      1138      5247     1326      288
 Real Estate       450     1305      196      1131       473      3686      695       73
 Machinery         161      291      291       488       530      1262      592      193
 Other & Livestoc   52       32       59       197       135       298       39       22

Debt/Asset Ratios*
 Total            0.20     0.23     0.20      0.18      0.19      0.23     0.28     0.16
 Intermediate     0.22     0.38     0.21      0.17      0.20      0.34     0.38     0.15
 Long Run         0.19     0.19     0.18      0.18      0.18      0.18     0.18     0.18

1995 Livestock
Beef Cows            0        0        0       200         0         0        0        0

1995 Gross Receipts
Total            316.1    835.8    427.5    1202.4     569.8    1483.1    476.5    274.6

 Cattle            0.0      0.0      0.0      43.4       0.0       0.0      0.0      0.0
                   0.0%     0.0%     0.0%     3.6%       0.0%      0.0%     0.0%     0.0%

 Medium Grain Rice316.1   835.8      0.0       0.0       0.0       0.0    181.2     78.2
                 100.0%   100.0%     0.0%      0.0%      0.0%      0.0%    38.0%    28.5%

 Long Grain Rice   0.0      0.0    420.5    1139.0     229.4     611.7    160.7    145.2
                   0.0%     0.0%    98.4%     94.7%     40.3%     41.2%    33.7%    52.9%

 Soybeans          0.0      0.0      0.0       0.0     120.4     318.4    111.0     48.3
                   0.0%     0.0%     0.0%      0.0%     21.1%     21.5%    23.3%    17.6%

 Corn              0.0      0.0      0.0       0.0     220.0     417.3      0.0      0.0
                   0.0%     0.0%     0.0%      0.0%     38.6%     28.1%     0.0%     0.0%

 Wheat             0.0      0.0      0.0       0.0       0.0       0.0     22.5      0.0
                   0.0%     0.0%     0.0%      0.0%      0.0%      0.0%     4.7%     0.0%

 Cotton            0.0      0.0      0.0       0.0       0.0     135.7      0.0      0.0
                   0.0%     0.0%     0.0%      0.0%      0.0%      9.2%     0.0%     0.0%

 Other Income      0.0      0.0      7.0      20.0       0.0       0.0      1.0      3.0
                   0.0%     0.0%     1.6%      1.7%      0.0%      0.0%     0.2%     1.1%

1995 Planted Acres
Total            380.0    960.0    564.8    1612.0    1821.3    3880.0   1254.4    875.1

 Medium Grain Rice 380.0  960.0      0.0       0.0       0.0       0.0    297.3    166.3
                 100.0%   100.0%     0.0%      0.0%      0.0%      0.0%    23.7%    19.0%

 Long Grain Rice   0.0      0.0    564.8    1412.0     480.0     960.0    275.5    308.8
                   0.0%     0.0%   100.0%     87.6%     26.4%     24.7%    22.0%    35.3%

 Soybeans          0.0      0.0      0.0       0.0     650.0    1600.0    558.3    400.0
                   0.0%     0.0%     0.0%      0.0%     35.7%     41.2%    44.5%    45.7%

 Corn              0.0      0.0      0.0       0.0     691.3    1020.0      0.0      0.0
                   0.0%     0.0%     0.0%      0.0%     38.0%     26.3%     0.0%     0.0%

 Wheat             0.0      0.0      0.0       0.0       0.0       0.0    123.3      0.0
                   0.0%     0.0%     0.0%      0.0%      0.0%      0.0%     9.8%     0.0%

 Cotton            0.0      0.0      0.0       0.0       0.0     300.0      0.0      0.0
                   0.0%     0.0%     0.0%      0.0%      0.0%      7.7%     0.0%     0.0%

 Hay               0.0      0.0      0.0     200.0       0.0       0.0      0.0      0.0
                   0.0%     0.0%     0.0%     12.4%      0.0%      0.0%     0.0%     0.0%
___________________________________________________________________________________________
 *Receipts for 1995 are included to indicate the relative importance of each enterprise to the
  farm. Percents indicate the percentage of the total receipts accounted for by the livestock
  categories and the crops.
**Acreages for 1995 are included to indicate the relative importance of each enterprise to the
  farm; these reflect acreage reduction percentages that year. Total planted acreage may exceed
  total cropland available to double cropping. Percents indicate the percentage of total planted
  acreage accounted for by the crop.

Appendix B: Definitions of Variables in Summary Tables

Change in Real Net Worth w/o Land, 1996-2002 -- The overall percentage change in the operator's net worth when land equity is not included, from January 1, 1996 through December 31, 2002, after adjusting for inflation. This value approximates the real increase or decrease in earned net worth over the planning horizon.
Change in Real Net Worth, 1996-2002 -- The overall percentage change in the operator's net worth from January 1,1996 through December 31, 2002, after adjusting for inflation. This value reflects the real increase or decrease in net worth or equity for the farm over the planning horizon.
Government Payments to Receipts, 1996-2002 -- The average value of all government payments divided by total receipts received from the market plus farm programs (deficiency payments, decoupled payments, CCC loans, marketing loan gains, and crop insurance indemnities). The average value in the tables is computed over the seven year planning horizon.
Expenses to Receipts, 1996-2002 -- The ratio of all cash expenses divided by total receipts received from the market place plus farm programs. Cash expenses include interest costs, fixed cash costs, and variable costs but exclude principal payments, depreciation, income taxes and family living expenses.
Average Cash Receipts, 1996-2002 -- Gross receipts are cash receipts from market sales, deficiency payments, decoupled payments, CCC loans, marketing loan gains, crop insurance indemnities, and other farm related income. The values presented in the tables represent the average value of total receipts for each year in the planning horizon.
Average Net Cash Income -- Net cash farm income equals gross receipts minus all cash production costs including interest payments. Net cash farm income is used to pay family living expenses, principal payments, income taxes, self employment taxes, and machinery replacement costs. The values presented in the tables represent the average value of net cash farm income for each year in the planning horizon.
Average Government Payments -- The average value of all payments received for farm programs (i.e., deficiency payments, transition payments, decoupled payments, CCC loans, and marketing loan gains) and payments received from crop insurance indemnities. The values presented in the tables represent the average value of total payments for each year in the planning horizon.
Average Total Debt -- Ending debt is the sum of land debt, intermediate-term debt for machinery and breeding stock, and operating loan carryover at end of the year. The values presented in the tables represent the average value of total debt for each year in the planning horizon.
Average Nominal Net Worth -- Total net worth or equity at the end of each year of in the planning horizon equals total assets including land minus total debt from all sources. This value of net worth is not adjusted for inflation and is reported for each year in the planning horizon.
NIA for Real Net Worth w/o Land Inflation, 1996-2002 -- Net income adjustment (NIA) is the annual increase or decrease in net cash farm income necessary to cause the change in real net worth, excluding land inflation, to equal zero over the planning horizon. If the change in net worth is negative, the NIA is the annual increase in net income necessary to prevent a loss in real net worth. NIAs are expressed both as total dollars per year and as a percent of average annual cash receipts.
NIA for Total Real Net Worth, 1996-2002 -- Net income adjustment (NIA) is the annual increase or decrease in net cash farm income necessary to cause the change in total real net worth, including land inflation, to equal zero over the planning horizon. If the change in net worth is negative, the NIA is the annual increase in net income to prevent a loss in total real net worth. NIAs are expressed both as total dollars per year and as a percent of average annual cash receipts.

APPENDIX C: RICE PANEL FARM COOPERATORS

REPRESENTING RICE FARMS ECONOMIC OUTLOOK: FAPRI/AFPC DECEMBER 1995 BASELINE

AFPC Working Paper 96-2

Edward G. Smith James W. Richardson Joe L. Outlaw Ronald D. Knutson Allan W. Gray Steven L. Klose John W. Miller

Department of Agricultural Economics Texas Agricultural Experiment Station Texas Agricultural Extension Service Texas A&M University

February 1996

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

REPRESENTATIVE RICE FARMS ECONOMIC OUTLOOK: FAPRI/AFPC DECEMBER 1995 BASELINE

Introduction

Panel Farm Process

Key Assumptions

FAPRI December 1995 Baseline

Farm Level Impact of AMTP

Table 4. CHARACTERISTICS OF PANEL FARMS PRODUCING RICE

Conclusion

APPENDIX A: CHARACTERISTICS OF REPRESENTATIVE FARMS