Also in this issue.
Price, Promotion and
Differentiation Effects of
by M. B. Ward, J. P.
Shimshack, J. M. Perloff
and J. Michael Harris.
Immigration and the
Changing Face of
by Alfonso Guilin,
Philip Martin and
In the next issue.
Information Systems in
by David Just and
negotiation, the Farm Security and
Rural Investment (FSRI) Act of 2002
was signed in to law by President Bush on
May 13, 2002. For more than six decades,
the United States has periodically renewed
ing domestic farm subsidy programs and
related policies. The new “Farm Bill”, the
latest in this long history, has received
wide media attention around the globe and
here in California. Farm bills are typically
large and complex with many separate
“titles” covering a variety of farm, food and
rural issues. The FSRI Act is no exception
and includes titles on such diverse topics as
food assistance for the poor, research and
extension support, food safety and aid to
rural communities. This article will focus
specifically on the parts of the bill that
have major implications for commodity
agriculture. Even then there are simply too
many complicated wrinkles in the legisla-
tion to cover them all here.
This article is a preliminary survey of
some commodity market implications of
the new law with a particular emphasis on
California. It is too early to have definitive
results; even the specifics of implemen-
tation of the law are yet to be finalized.
However, we do have enough information
to provide an overview of changes in the
legislation and how it is likely to affect
major markets. A closely related topic is
how the FSRI Act relates to the U.S. com-
mitments and negotiations in the World
Trade Organization (WTO).
The FSRI Act continues the traditional
farm programs by providing almost all the
direct support to a relatively small hand-
ful of commodities. Most of the direct
payments are provided to wheat, feed
grains (mainly corn), oilseeds (mainly
soybeans), cotton and rice. Dairy is also
supported with payments and market
regulations, and program support is also
provided to some minor crops.
from farm subsidy programs. California
typically produces about 15 percent of
farm value in the United States and will
likely receive less than five percent of the
farm payments authorized in the FSRI
Act (most of which go to California’s rice
and cotton industries). Overall, about 70
percent of farm value produced in Cali-
fornia, including production of fruits,
tree nuts, vegetables and melons, and
meat animals, receive almost no direct
support from Farm Bill subsidies.