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Federal Agricultural Improvement and Reform Act (FAIR) Act of 1996, crop diversity, farm systems, farm policy, USDA


The Federal Agricultural Improvement and Reform Act (FAIR) Act of 1996, popularly known as "Freedom to Farm", represented a fundamental shift in the primary policy mechanism for supporting farm incomes in the United States (U.S.). Crop-specific "deficiency payments" were replaced by "production flexibility contract payments", scheduled to run through the year 2002 and, presumably, then terminate. The total amount available for contract payments nationwide started at $5.6 billion in fiscal year (FY) 1996, was to reach $5.8 billion in FY 1998, and was to decline to $4 billion in FY2002 (ERS, 1996, p. 1). Allocations to each contract farm are based on the farm's historical base acreage and yield, not on current acreage planted to individual crops. Thus, farmers have almost unlimited planting flexibility under "Freedom to Farm". Will this flexibility result in more crop system diversity over time? Advocates of less chemical-intense and more diverse-rotation farming systems often have felt that previous farm bills, with their crop-specific subsidies, contributed to the near disappearance of diverse rotations in most parts of the U.S. In a companion report, we recently analyzed the historical evolution and narrowing of crop systems in seven eastern South Dakota counties (Dumke and Dobbs, 1999). That analysis indicated that the narrowing of crop systems over the past half-century has been due to interactions of several factors, including Federal farm policy. Farm price supports policies prior to the 1996 farm bill tended to disproportionately support particular crops, such as com and wheat. Research and technology development--in both public and private sectors--also have focused heavily on a few major crops, especially com, wheat, and soybeans in the Western Com Belt and Northern Great Plains. Due to equipment costs, larger farm sizes, spouses and teenage children spending less time in farm work, and the amount of management attention needed to effectively produce and market different products, farmers have increasingly specialized in just a few crop and livestock enterprises. Moreover, markets gradually disappeared in some areas for certain crops such as flax. We concluded from the historical portion of our analysis that, while past Federal farm policies have contributed to the narrowing of crop systems, changes in farm policies alone are unlikely to cause substantial crop system diversity. However, we also went beyond the historical analysis to focus specifically on farmers' perceptions about likely impacts of the 1996 farm bill. We report our findings in that area in this paper.


Department of Economics, South Dakota State University

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