1) Direct payments under the USDA program would be slightly larger. For corn and wheat rates are unchanged through 2009. The rates increase for from 28¢ to 30¢ cents in 2010-2012 then return to 28¢ baseline levels in 2013. Wheat payments would be 52¢ and rise to 56¢ in 2010-2012, and then return to 52¢. Soybean direct payment rates remain at baseline levels (44¢/bu.) in 2007 then increase in 2008 and 2009 to 47¢/bu. The rate increases again in 2010-2012, to 50¢/bu, before dropping back down to 47¢/bu in 2013.
2) For the marketing loan, the administration’s proposal is to lower loan rates. Loan rates will be the lesser of: 1) the loan rate for the commodity proposed in the 2002 House farm bill, or 2) 85 percent of an Olympic average (the average of the most recent five years, excluding the high and the low) of season-average farm prices. For most commodities this results in new loan rates at the levels proposed in the 2002 House farm bill. Corn, wheat, and soybeans, loan rates are slightly lower than current levels, as the House version called for lower loan rates than the final bill.
3) The revenue counter cyclical program replaces the current countercyclical payment program, where payments are triggered by price alone, is replaced with a program that triggers payments when the revenue (yields times prices) is lower than national target revenue per acre. For each commodity, a target level of national revenue per acre is determined by subtracting the 2002 farm bill direct payment rate from the 2002 farm bill target price, and multiplying the result by the Olympic average of 2002‐2006 national yields per harvested acre. If actual national-average revenue per acre is less than the target revenue, then payment rates are calculated by dividing the difference by the current national average countercyclical payment yield.

So what happens to your revenue stream if these proposals make it into the 2007 Farm Bill? The economists at FAPRI applied the proposals to farms which had a mix of program crops. “For these 21 farms, average annual direct payments over the outlook period are five percent higher under the administration’s proposal.”

Regarding the lower rates for the marketing loan, FAPRI said, “The result of the lower loan rates has a negative, but small impact on marketing loan benefits on all of the representative farms. Under baseline market conditions, the Feedgrain-soy and Crop-beef farms are projected to receive little marketing loan benefits anyway. Therefore, the lower loan rates in the administration’s proposal have little effect on these farms.”

And for the switch to a revenue counter cyclical program, FAPRI said, “The change in the countercyclical program negatively impacts all (farms). Under baseline market conditions, the feed grain-soy and crop-beef farms are projected to receive very little income from the countercyclical program. The farms in these two categories average about $500 per year in CC payments in the baseline. These payments drop to an average of just over $100 in the administration’s proposal.”

Looking at total revenue:
1) The Feed grain-soy and Crop-beef total government payments increase by an average of three percent annually.
2) Crop prices are not affected much by the change in policy. Corn, soybeans, and wheat prices are within one or two cents of the baseline in the administration’s scenario due to little change in acreage planted for each of these crops nationally. Of the 22 representative farms, 21 have lower average annual market receipts under the administration’s proposal when compared to the baseline.
3) The impact on net cash farm income for the majority of the farms is minimal. Net cash farm income on 21 of the 22 representative farms changes by less than one percent. Five of the 22 representative farms have a reduction in net cash farm income under the administration’s proposal.
4) However, the increase in market receipts is greater than the decrease in government payments and results in an increase in net cash farm income.

Summary:
USDA’s Farm Bill proposal was written to have minimal impact on the federal budget but to remove threats to the US farm programs from their world trade critics. While the trade issues might be smoothed out with the changes, farm families will feel little impact to their bottom line.