We are pleased to launch Policy Briefs by the Purdue Agricultural Economics Department.  We aim to provide short insights, readable for the general public, on policy issues that are national in scope with an Indiana flair. We were initially motivated by the need to provide timely analysis in the lead up to 2018 Farm Bill discussions. However, the breadth of expertise in our department and the ongoing policy discussions related to farm, food, environment, trade, and development issues warrants a longer view and broader scope. The plan is to add new briefs on a monthly basis, although we may add more frequent contributions when more timely information is needed.  We hope to enrich policy debates by providing data and context, quantifying impacts, and offering alternatives.  

How U.S. Agriculture Will Fare Under the USMCA and Retaliatory Tariffs

Authors: Maksym Chepeliev, Wally Tyner and Dominique van der Mensbrugghe 

Date: October 31, 2018

Abstract: A hallmark of the Trump Administration has been to reverse the post-World War II consensus on lowering of trade barriers and a commitment towards multilateral free trade, towards a more protectionist and perhaps mercantilist position vis-à-vis trade policy. One of the Administration’s first actions in this regard was the decision to leave the Trans-Pacific Partnership (TPP) agreement, followed thereafter by raising tariffs on steel and aluminum imports. President Trump left no doubt where he stood on the North American Free Trade Agreement (NAFTA), which he often stated was the “worst trade deal maybe ever signed anywhere.” The administration’s actions on trade are likely to have significant implications for U.S. farmers as these actions target three of the largest markets for U.S. agricultural exports—Canada, China and Mexico—accounting for some 44% of U.S. agricultural exports representing an average of $63 billion from 2013 to 2015. 

Policy briefs from the The Long Run Sustainability of US Agriculture Conference

Date: September 17, 2018​

Project/Briefs Overview: The goal of this project was to leverage existing knowledge, models and data to understand and communicate the interplay between global change and local sustainability of US agriculture in the context of alternative national, state and local policies affecting agricultural productivity and environmental quality. In particular, the team examined the tradeoffs between: 1) crop production, prices and food consumption, 2) nitrogen losses, and 3) groundwater depletion. Special attention was paid to the role of current policies and institutions in governing these tradeoffs, as well as the impacts of prospective policies targeting land use, nitrogen applications and the allocation of groundwater.

  1. Global Drivers of Land and Water Sustainability Stresses at Mid-century
  2. Productivity Growth is Key to Achieving Long Run Agricultural Sustainability
  3. Evaluating Alternative Options for Managing Nitrogen Losses from Corn Production

Authors: Katare Bhagyashree, Dmytro Serebrennikov, H. Holly Wang, and Michael Wetzstein
Issue Number: PAEPB-2018_11
Date: September 5, 2018
Tags: External Costs, Food Insecurity, Food Waste, Social Welfare, Sustainability
Abstract: In 2010, U.S. households wasted 21% of the total food available for consumption. In response to this waste, a number of U.S. localities have considered policies (disposal taxes) directed toward reducing this waste. Currently there is no federal food-waste disposal tax.  Determining the preferred government policies toward food waste requires an understanding of the household response to policies.  This unravels the interrelation between social food insecurity and external environmental costs, which households do not generally consider when they waste food.  Such an unraveling will only yield zero food waste if there is certainly in future food consumption, no governmental costs associated with waste mitigation and households are very responsive toward reducing their food waste to zero in response to government policies. Otherwise, some positive level of food waste is socially preferred.

Author: Michael Wetzstein
Issue Number: PAEPB-2018_10
Date: June 20, 2018​
Tags: Motivational Crowding, Optimal Subsidy, Prosocial Evaluation, Solar Photovoltaic
Abstract: In determining a government solar subsidy level, it is important to integrate the technical with the social science. Such a framework integrates the technical environment, health, employment, and electricity accessibility benefits with consumers’ prosocial behavior. Prosocial consumers may adopt solar power without any subsidy because it increases their reputation as environmentalists. A solar subsidy may reduce this prosocial behavior resulting in lower than expected adoption, called a rebound effect. Considering this effect reduces the optimal subsidy based on external costs. Estimates of the optimal solar subsidy is approximately $0.02 per kilowatt-hour when not considering prosocial behavior. This optimal subsidy is in line with many current state subsidies, which may represent the upper bound when not considering social science in policy analysis.

Author: Roman Keeney
Issue Number: PAEPB-2018_9
Date: May 22, 2018​
Tags: Farm Bill, Farm Policy, Budget, House Agriculture Committee
Abstract: In this brief, we examine the rules that control federal spending legislation and the potential impacts on replacing the 2014 Farm Bill. Congress (via the House Agriculture Committee) has released a draft 2018 Farm Bill that provides some insight into the limits that budgetary rules place on changing the system of farm and food programs in the U.S.​

Author: Michael Langemeier
Issue Number: PAEPB-2018_8
Date: May 17, 2018​
Tags: Crop Insurance; Farm Safety Net
Abstract: This brief provides a brief discussion of crop insurance products available in 2018. Crop insurance products differ by whether they protect against low yields or low revenue, whether they pertain to farm or county yields, and by coverage level.

Author: Michael Langemeier
Issue Number: PAEPB-2018_7
Date: May 17, 2018​
Tags: Crop Insurance; Farm Safety Net
Abstract: Crop insurance can be an effective tool to mitigate downside risk on crop farms. As with last year’s crops, in 2018 there are several crop insurance products to choose from in the Corn Belt. This brief provides an illustration of insurance guarantees and potential insurance payments for various yield and price scenarios.

Author: Otto C. Doering
Issue Number: PAEPB-2018_6
Date: May 1, 2018​
Tags: Conservation Title, Farm Bill Draft, Conservation Budget
Abstract: On April 12th, the Republican majority of the House Agriculture Committee reported out a draft Agriculture and Nutrition Act of 2018. Title II, the Conservation Title, includes substantial changes to several existing programs. The Conservation Reserve Program acreage cap is lifted from 24 to 29 million acres and contract rents are reduced to 80% of county averages. Reduced rental rates may make this land retirement program less attractive to farmers, especially if commodity prices increase. Reduced rental rents may also keep high quality productive land from going into the reserve. For the working lands programs, the Conservation Security Program (CSP) is eliminated and some of its components put under the Environmental Quality Incentive Program (EQIP). Whole farm comprehensive program options that were available in the CSP are reduced without commensurate increases in the practice specific EQIP programs. The combined program budget is cut by 20%.

Author: H. Holly Wang
Issue Number: PAEPB-2018_5
Date: April 17, 2018​
Tags: Export to China, Pork, Soybeans
Abstract: Over the past two weeks, U.S. and Chinese governments announced a series of tariffs against each other’s export.  These tariff threats, if materialized, may cause multi-billion dollars of export loss for the U.S. farmers because pork and soybeans, the two largely exported agricultural commodities are included on the list of products being heavily tariffed.  

Author: Larry DeBoer and John Sanders
Issue Number: PAEPB-2018_4
Date: April 17, 2018
Tags: tariffs, trade deficit, budget deficit, exchange rates, interest rates, china, soybeans, steel
Abstract: The U.S. is considering tariffs on imports of steel and aluminum.  This brief analyzes the effects of tariffs on our production of goods and services, and on employment, inflation, interest rates and exchange rates.

Author: Jayson L. Lusk
Issue Number: PAEPB-2018_3
Date: March 27, 2018
Tags: Farm Bill, Food Stamps, Nutrition, School Lunch, SNAP, WIC
Abstract: This brief describes federal food assistance programs administered through the U.S. Department of Agriculture.  These programs represent the over 70% of the USDA budget and affect millions of U.S. citizens.

Author: Roman Keeney 
Issue Number: PAEPB-2018_2
Date: March 8, 2018
Tags: Farm Bill; Nutrition; Commodity Support; Federal Budget
Abstract: This brief uses the occasion of President Trump’s fiscal 2019 budget to review the role of presidential administrations in Farm Bill deliberations. We look at specific proposals offered in the new budget document and identify how those might be interpreted in comparison to previous published budget documents.

Author: Roman Keeney 
Issue Number: PAEPB-2018_1
Date: March 8, 2018
Tags: Farm Bill; Nutrition; Commodity Support; Federal Budget
Abstract: This brief is intended to provide an overview of the Farm Bill process including the key issues of scope and timing. Growth in the federal deficit along with the broad scope and time sensitive nature of Farm Bill expiration make for an uncertain future for farm programs and other included measures.

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