Government Program Decision Analysis in Nebraska at the Farm Level

Authors

Tatum R. Brunkow, University of Nebraska-LincolnFollow

First Advisor

Bradley D. Lubben

Date of this Version

5-2024

Citation

A thesis presented to the faculty of the Graduate College at the University of Nebraska in partial fulfillment of requirements for the Degree of Master of Science

Major: Agricultural Economics

Under the supervision of Professor Bradley D. Lubben

Lincoln, Nebraska, May 2024

Comments

Copyright 2024, Tatum R. Brunkow

Abstract

The one-year extension of the 2018 Farm Bill until September 30, 2024, has extended several government programs for the 2024 crop year including those in Title I: Commodities. This analysis looks at three different financial scenarios and analyzes five different alternatives for a case farm to select the optimal farm program decision for the operation by evaluating net farm income. Since 2021, eligible producers have been able to elect either Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC) for their operation on an annual basis. Support levels for these programs are trending close together making the election decision more complex this year as opposed to previous years.

Utilizing a case farm in Gage County Nebraska that is representative of a typical operation in the county provides the framework for farm level analysis of farm program decisions. The case farm consists of irrigated and non-irrigated corn and soybean enterprises. Analyzing the relevant data at the national, state, and county levels and drawing on correlations and distributional assumptions to simulate farm level data provides the necessary parameters to analyze farm program decisions eligible producers can make.

Results and conclusions based on this simulation for the 2024 crop year indicate the combination of farm program decisions and crop insurance that provides the optimal balance of risk and return for a risk-averse producer. Program decisions reflect current legislation laid out in the 2018 Farm Bill. The programs could change with future farm bill legislation, extension, or elimination, leaving the need for continued farm level research. The alternatives in this analysis based on different financial scenarios for the case farm include crop insurance and production practices that reflect similar operations in Gage County. Results could vary for farms with different acres, enterprises, and locations, but this analysis provides a framework for a stochastic simulation for farm level analysis that could be adapted for other farms, crops, farm programs, or years.

Advisor: Bradley D. Lubben