Introduction

The last three farm bills have provided legislation allowing varying levels of freedom

with regard to choice of crops grown ranging from marginal flexibility to complete

flexibility. Increased acreage planting flexibility over the last fifteen years has allowed

agricultural producers to make production choices with less control and influence from

government program provisions. Several relevant studies have been completed using a

wide range of methodologies to examine producer behavior when granted more liberties

concerning planting decisions. Thompson, Knight, and Boren (1990) used a decision

model (decision tree structure) to study the benefit of 50/92 and 0/92 reduced planting

alternatives provided for in the 1985 farm bill for central Texas farm program

participants. They found that risk neutral producers would not benefit from these

provisions; however, risk averse producers would derive considerable gains from these

provisions in growing seasons when low yields are likely by reducing acres planted. A

mean-standard deviation (E-S) analysis was used by Chien and Leatham (1994) to

evaluate impacts of planting flexibility provided for in the 1990 farm bill on crop mix,

farm income, and uncertainty involved in farming.

2007 JOURNAL OF THE A|S|F|M|R|A

85

Abstract

Increased acreage planting

flexibility granted through the

last three farm bills has allowed

agricultural producers to make

production choices without

government programs driving

their decisions. Planted acre

data for program crops in seven

Texas regions is used to

describe producers’ responses

to the increased flexibility.

J. Marc Raulston; Research Associate; Texas A&M University

Steven L. Klose; Assistant Professor and Extension Economist; Texas A&M University

Joe L. Outlaw; Professor & Extension Economist; Texas A&M University

James W. Richardson; Regents Professor and Senior TAES Faculty Fellow; Texas A&M

University

They concluded that benefits derived from planting flexibility

were not great enough to overcome the 15 percent loss in

deficiency payments for those participating in the farm

program. Wu, Walker, and Brusven (1997) used an integrated

systems model to evaluate the relationship between planting

flexibility and conservation compliance terms in the 1985 and

1990 farm legislation. One key finding relevant to their research

is that when both provisions are working in tandem, producers’

behavior is more driven by prevailing market conditions.

Westcott, Young, and Price (2002) approached the broader

scope of studying the impacts of the 2002 Farm Act on planting

decisions of major field crops. Key, Lubowski, and Roberts

(2004) utilized Agricultural Census data to compare changes in

planted acres for the 1992-1997 period between farm program

participants and a control group of producers not participating

in commodity programs.

The primary objective of this research is to examine producer

response with respect to crops planted after the passage of each

piece of legislation that granted increased planting flexibility.

This study will focus specifically on planted acreage changes

for program crops occurring after the 1990, 1996, and 2002

farm bills were implemented in seven multi-county regions of

Texas.

Background

Prior to passage of the 1990 farm bill, the Food Security Act of

1985 (1978-1985) was the prevailing farm program. Under the

1985 farm bill, producers were required to plant to their base to

receive government payments, essentially limiting the ability to

respond to changing market conditions. The Food Agricultural

Conservation and Trade Act of 1990 (1991-1996) allowed

producers to grow any eligible commodity except for fruits and

vegetables on a maximum of 25 percent of base acres. Under

the 1990 Act, 15 percent of base acreage was referred to as

normal flex acreage. A producer could plant the normal flex

acres to the original crop or another eligible commodity.

Regardless of their planting decision on the flex acres,

producers did not receive deficiency payments on 15 percent of

crop base acres. On an additional 10 percent of the base

acreage, producers received deficiency payments only if they

planted the original program crop. This acreage was called

optional flex acreage. Prior to this legislation, producers were

required to grow the original program crop on base acreage to

receive government support.

In an effort to further expand planting flexibility, the Federal

Agriculture Improvement and Reform Act of 1996 (1997-2002)

provided for full planting flexibility on previous crop acreage

bases, with the only restrictions involving growing fruits and

vegetables.

The Farm Security and Rural Investment Act of 2002 (2002-

present) retained provisions for full planting flexibility on crop

acreage bases with the continued fruit and vegetable restriction

and permitted farmers the option to update base acres and

program payment yields.

Data and Methods

Planted acre data was collected from the National Agricultural

Statistics Service database for all program crops grown in seven

multi-county regions in Texas (USDA National Agricultural

Statistics Service 2006). Acreage was analyzed for program

crops including corn, cotton, oats, peanuts, rice, sorghum,

soybeans, sunflower, and wheat. The locations of the seven

regions in the study are shown in Figure 1 and include the

Panhandle (Moore and Sherman Counties), South Plains

(Dawson and Gaines Counties), Blacklands (Milam and

Williamson Counties), Middle Coast (Colorado and Wharton

Counties), Coastal Bend (San Patricio and Nueces Counties),

Winter Garden (Zavala and Uvalde Counties) and the Lower

Rio Grande Valley (Cameron and Willacy Counties). These

regions provide a cross section of major crop production areas

to examine planted acreage trends. The data were divided by

commodity into four time periods (Period 1: 1985-1990; Period

2: 1991-1996; Period 3: 1997-2002; and Period 4: 2003-2004)

corresponding to implementation of major farm bill legislation.

Commodities comprising less than five percent of total program

crop acreage in a given county will not be discussed, but those

results are reported in Table 1 for the seven regions. Planting

patterns were examined between these periods to determine the

extent to which producers have made crop mix changes under

the changing environment of farm bill planting flexibility.

Average planted acres for each period was compared to the

previous period to determine if a statistically significant shift in

planted acres occurred. Because the number of years in the

individual periods were not equal, a two sample student-t test

was utilized to test for statistically significant changes in the

means. Depending on the comparison between a calculated test

value and a critical value for each series, the test either fails to

reject with 95 percent confidence the hypothesis that the two

2007 JOURNAL OF THE A|S|F|M|R|A

86

means are equal or rejects with 95 percent confidence the

hypothesis that the means are equal. Table 1 reports the

program crop acres planted in each of the seven multi-county

regions. Numbers in bold indicate that the average planted acres

for a crop is statistically different from the average planted

acres for the crop under the previous farm program. Table 2

provides a regional summary of significant changes in planted

acres of government program crops between farm bill periods.

Available state average market prices for all program crops

were also collected from USDA-NASS and categorized into the

aforementioned farm bill periods (Table 3). A two sample

student-t test was utilized for comparing average prices between

farm bill periods to determine if statistically different average

market prices were prevalent between the periods. Price

comparisons serve to isolate shifts in market conditions that

may have encouraged planted acreage responses with increased

flexibility granted through the 1990 farm bill and the 1996 farm

bill.

Results

The strongest planted acreage shift occurred following passage

of the 1996 farm bill dubbed “Freedom to Farm” (Period 2 to

Period 3). The changes in acres planted following passage of

the 1990 legislation were a close second. These two time

periods represent more significant changes in flexibility

compared to the 2002 farm bill. The analysis suggests that most

producer reaction allowed by increased planting flexibility had

already occurred before passage of the 2002 legislation.

Changes in planting patterns following the 2002 bill are

minimal reflecting the continuation of flexibility similar to the

1996 legislation.

The two regions that experienced the least change in planted

acreage were the Lower Rio Grande Valley and the Winter

Garden. These are also the major areas of the state with a

history of growing fruits and vegetables or other specialty

crops, indicating that the remaining fruit and vegetable planting

restriction could be limiting any potential acreage shifts in

program crops in these regions.

The only statistically different price shift occurred when

examining the periods before and after passage of the 1996

farm bill. The price shifts in the late 1990s definitely provided

market signals for producers to react to in the new era of

planting flexibility. Interestingly, mean peanut price decreased

during the period while planted acres of peanuts showed a

statistically significant increase in the South Plains region. The

peanut shift coincides with the elimination of the peanut quota

system, but the increase in peanut acres in a historically cotton

producing region supports the hypothesis that planting

flexibility has allowed producers to align planting decisions

with more favorable market conditions.

Following are results of the comparison by multi-county region,

highlighting changes in planted acreage of program crops.

Blacklands

Average acres planted to corn more than doubled following

passage of the 1996 legislation, while cotton saw a 60 percent

decline and sorghum experienced a 36 percent reduction in

planted acres (Table 1). Previously, cotton had experienced a

37 percent increase following passage of the 1990 bill. Wheat

experienced a 43 percent decline in planted acres in the years

following passage of the 1990 bill.

Coastal Bend

The years following passage of the 2002 bill saw a 67 percent

decrease in average corn acres planted (Table 1). This is only

one of three significant shifts that occurred following the 2002

legislation. The Coastal Bend region realized a 47 percent

increase in cotton acres after passage of the 1990 bill. In fact,

the area saw a 22 percent increase in total acres planted to

program crops following the 1990 farm bill.

Lower Rio Grande Valley

The Lower Rio Grande Valley made a significant shift from

corn to grain sorghum following the 1990 bill (Table 1). Corn

experienced a 57 percent decline in planted acres while

sorghum experienced a 52 percent increase in average planted

acres. Acreage shifts in other time periods were negligible.

Middle Coast

Cotton acres increased by a magnitude of 2.6 times (160

percent) after the 1990 bill went into effect in the Middle Coast

region (Table 1). Another significant increase of 46 percent

occurred after passage of the 1996 bill. Rice acreage in the

region has steadily declined since the 1996 bill (13% decrease