AGEC 429 Exam 2 Questions and Answers: Agricultural Policy and Farm Bills, Exams of Nursing

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Policy changes slowly as __________, ___________, ___________ change. - correct answer ✔✔value, beliefs, goals What three acts make up the three-legged stool? - correct answer ✔✔Morrill Act. Hatch Act, and Smith- Lever Act The Morrill Act donated? - correct answer ✔✔Public Lands to the several States and Territories which may provide Colleges for the Benefit of Agriculture and the Mechanic Arts The Hatch Act established? - correct answer ✔✔agricultural experiment stations (Research) The Smith-Lever Act set up the? - correct answer ✔✔Extension system to communicate new technologies from the USDA direct farmers In what year did the federal government begin nutrition assistance? - correct answer ✔✔ 1933 Most of the current policies we have today have their roots in this Act? - correct answer ✔✔Agricultural Adjustment Act of 1933 Last farm bill enacted without an expiration date? - correct answer ✔✔Agriculture Act of 1949 Parity prices definition: - correct answer ✔✔that price which today gives a unit of the commodity the same purchasing power as it had in 1910- What years were known as the "Golden Years"? - correct answer ✔✔1970s

Bad weather in U.S. and around the World, Russians started buying grain, Negative real interest rate, Prices high "parity", all happened during the? - correct answer ✔✔golden years The farm problems began from? - correct answer ✔✔inelasticity of supply and demand, weather, fixity of ag resources, and bad government policy decisions The CCC was created to? - correct answer ✔✔stabilize and support agricultural prices and farm income by making loans and payments The CCC handles all? - correct answer ✔✔all money transactions for agricultural price and income support and related programs The USDA credit card is also known as? - correct answer ✔✔The CCC Farmer complaints about base acres and farm program yields: there was no? - correct answer ✔✔flexibility to plant for the market and still receive program benefits Last farm bill to contain supply mgmt. provisions - correct answer ✔✔1990 Farm Bill CCP = - correct answer ✔✔Target price - (Max Market Price) - Direct payments MLG = - correct answer ✔✔Marketing loan rate - Market price Under the 1990 Farm Bill, if the ARP for rice is announced at 10% but production only declined 4%, what happened? Why? - correct answer ✔✔- Slippage of 6%: the percentage decrease in production is less than the percent announced at APR

• Farmers idled least productive land and farmed other 90% more intensely with more fertilizer What were 5 of the reasons given in class for the delay in getting the 2014 farm bill passed? - correct answer ✔✔1. Really good prices for most commodities gave false feeling

2. Commodity groups championed proposals and were reluctant to compromise
3. Attention to budget deficit

4. WTO cotton case
5. Thought crop insurance was doing a good enough job Texas A&M is a good example of the land grant mission. Describe the mission/components of a land grant university and the legislation that enabled part of the mission? - correct answer ✔✔Three legged stool: Morrill Act (teaching), Smith-Lever Act (extension), Hatch Act set TAMU as a land grant (research) What were the policies used to provide a safety net to farmers during each of the farm bills listed below? Beside each tool you list indicate whether the tool is decoupled or coupled and if coupled what is it coupled to: 1990 - - correct answer ✔✔- TP/DP: fully coupled

• NRML: fully coupled
• ARP: supply management What were the policies used to provide a safety net to farmers during each of the farm bills listed below? Beside each tool you list indicate whether the tool is decoupled or coupled and if coupled what is it coupled to: 1996 - - correct answer ✔✔NRML: fully coupled DP: fully decoupled What were the policies used to provide a safety net to farmers during each of the farm bills listed below? Beside each tool you list indicate whether the tool is decoupled or coupled and if coupled what is it coupled to: 2002 - - correct answer ✔✔- DP: fully decoupled
• CCP: coupled to price only
• NRML: fully coupled What were the policies used to provide a safety net to farmers during each of the farm bills listed below? Beside each tool you list indicate whether the tool is decoupled or coupled and if coupled what is it coupled to: 2008 - - correct answer ✔✔- NRML: fully coupled
• ACRE: coupled to price only
• DCP: coupled to price only
• DP: fully decoupled

What were the policies used to provide a safety net to farmers during each of the farm bills listed below? Beside each tool you list indicate whether the tool is decoupled or coupled and if coupled what is it coupled to: 2014 - - correct answer ✔✔- ARC: coupled to price only

• PLC: coupled to price only
• NRML: fully coupled What were the primary reasons the 1996 farm bill was called a watershed change in agricultural policy? Why is it considered both a success and failure? (4) - correct answer ✔✔1. significant departure from previous Fbs which tied production decisions to gov payments and gave planting flexibility

2. got rid of deficiency payments and target prices and ARP, kept non recourse loan
3. decoupled direct payments from production
4. support wasn't enough when commodity prices dropped - failure What is the significance of the 1949 Agricultural Adjustment Act to modern day ag policy? - correct answer ✔✔- last one that didn't have an expiration; permanent legislation

• forces congress to act and the parity prices give goods the same purchasing power as it had in 1910-

1914. If we revert back to parity prices would cost the government lots of money Describe the conditions surrounding cotton being removed as a covered commodity in the 2014 Farm Bill. How did that work out for cotton producers? Why was getting added back in the Bipartisan Budget Act of 2018 such a big deal? - correct answer ✔✔- cotton was removed due to the WTO cotton case. It did not work well for cotton producers because STAX did not provide farmers with enough support

• Bipartisan - it got cotton back in the farm bill before actually passing the 2018 bill. If cotton wasn't back in budget, they would've taken money from another commodity and upset them What does it mean that crop insurance is a public-private partnership? Also, how do crop insurance compete? - correct answer ✔✔Private companies sell crop insurance while the government subsidizes it which makes it more affordable. They compete based on service What does the coverage gap refer to? What was done for farmers to close the gap? - correct answer ✔✔- Producers produce a certain amount but its only covered to a certain level
• gap between actual yields and farm program yields
• they were given the opportunity to update close gap in 2002 and 2014

Evaluate this statement by saying you agree or disagree and then providing support for your answer: Farm programs do not make producers whole - correct answer ✔✔True because formulas have the. fraction that reduces the amount that was paid out and payment yields are lower than expected Why did Dr. Outlaw think that ACRE was such a bad idea for Texas producers? - correct answer ✔✔- It was a dual trigger program (state and producer)

• there was a drought in Texas so the 5 year olympic average of yields was drastically lower What was the last crop year with production controls? A. 1990 B. 1995 C. 1996 D. All of the above had production controls E. None of the above had production controls - correct answer ✔✔B If an ARP of 5% is in place for cotton, which of the following is true? A. This refers to a 1996 farm bill policy B. There will be government payments C. Commodity prices will be lower than without it D. All of the above E. None of the above - correct answer ✔✔E Who benefits the most from counter-cyclical payments? A. Producers B. Consumers C. Taxpayers D. Politicians E. Both B and C - correct answer ✔✔C

Which of the following policy tools is decoupled from prices but not production? A. PLC B. ARC C. Direct payments D. CCP E. None of the above - correct answer ✔✔E What makes a good safety net policy? A. All producers both domestic and international are better off B. At least domestic producers are better off C. Domestic consumers and producers are better off D. Good policy is in the eye of the beholder E. All of the above - correct answer ✔✔D Which of the following programs has the most capitalization? A. CCP B. Direct Payments C. ACRE D. ARP - correct answer ✔✔B Why would U.S. international competitors prefer the non-recourse loan more than the non-recourse marketing loan? - correct answer ✔✔- Market loan removes the price floor and allows the price to fall and the market to clear

• International commodities do not like us allowing the price to fall because it makes us more competitive likely reducing their sales For the following policy tools, list the farm bill(s) (1990, 1996, 2002, 2008, or 2014) the tools are associated with and say whether they are coupled or decoupled. If coupled indicate what they are coupled to - Price loss coverage (PLC): - correct answer ✔✔2014; coupled to price only

For the following policy tools, list the farm bill(s) (1990, 1996, 2002, 2008, or 2014) the tools are associated with and say whether they are coupled or decoupled. If coupled indicate what they are coupled to - AMTA, PFC and Direct Payments: - correct answer ✔✔96, 02, 08 For the following policy tools, list the farm bill(s) (1990, 1996, 2002, 2008, or 2014) the tools are associated with and say whether they are coupled or decoupled. If coupled indicate what they are coupled to - Average crop revenue election (ACRE): - correct answer ✔✔2008; coupled to price only For the following policy tools, list the farm bill(s) (1990, 1996, 2002, 2008, or 2014) the tools are associated with and say whether they are coupled or decoupled. If coupled indicate what they are coupled to - Counter-cyclical payments (CCPs): - correct answer ✔✔02, 08; coupled to price only For the following policy tools, list the farm bill(s) (1990, 1996, 2002, 2008, or 2014) the tools are associated with and say whether they are coupled or decoupled. If coupled indicate what they are coupled to - Agriculture risk coverage (ARC): - correct answer ✔✔2014; coupled to price only For the following policy tools, list the farm bill(s) (1990, 1996, 2002, 2008, or 2014) the tools are associated with and say whether they are coupled or decoupled. If coupled indicate what they are coupled to - Target prices/deficiency payments: - correct answer ✔✔1990; coupled to price and production T/F: the ACRE program has a dual national-level and producer-level - correct answer ✔✔F T/F: Not everyone benefits from trade - correct answer ✔✔T T/F: in Ag policy, policy tools are never reused but given different names - correct answer ✔✔F T/F: On of the take home messages from Mr. Huie was that farming is a way of life and not a business - correct answer ✔✔F T/F: Participation in the ACRE program was high among Texas producers - correct answer ✔✔F

T/F: The 1933 agricultural adjustment act was last farm bill enacted without an expiration date - correct answer ✔✔F T/F: In the 2014 Farm Bill, the only major title that saw an increase in funding was crop insurance. - correct answer ✔✔T T/F: Cotton was not a covered commodity in the 2014 Farm Bill. - correct answer ✔✔T T/F: Global food aid is administered and coordinated by the United Nations World Food Program. - correct answer ✔✔T T/F: The 2002 farm bill was the first time bases and yields could be updated since their creation in the mid-1980s. - correct answer ✔✔T Which was the first farm bill to provide producers a safety net choice? A. 1990 B. 1996 C. 2002 D. 2008 E. 2014 - correct answer ✔✔D What are two of the most misunderstood problems in the world? A. Farmer risk B. Hunger C. Malnutrition D. Both B and C E. None of the above - correct answer ✔✔D If an ARP of 5% is in place for cotton, which of the following is true? A. This refers to a 1990 farm bill policy

B. There will be slippage C. Commodity prices will be higher with the ARP D. All of the above E. None of the above - correct answer ✔✔D Evaluate the following statement and state whether you agree or disagree and provide support for your answer: The Brazil cotton case was an example of the WTO working quickly to rectify a violation of the rules. - correct answer ✔✔false; wasn't handled quickly (over a 10 year period) In the 1990 Farm Bill, if I wanted to guarantee farmers $4.00/bushel for corn how could I do that? A. Provide a direct payment of the difference B. Set the nonrecourse marketing loan rate at $4.00/bushel C. Implement an ARP that demand to a level that guaranteed $4.00/bushel D. Both B and C E. None of the above - correct answer ✔✔B In the 1990 Farm Bill, what were the carrot and the stick? A. The carrot was the nonrecourse loan rate and the stick was the deficiency payment B. The carrot was the deficiency payment and the stick was the nonrecourse loan rate C. The carrot was the deficiency payment and the stick was the ARP D. None of the above - correct answer ✔✔C Which was the first farm bill to not have production controls? A. 1990 B. 1996 C. 2002

D. 2008

E. 2014 - correct answer ✔✔B After the depression in the 1930s and World War II, three new institutions were created to deal with and facilitate globalization. These were: A. The international monetary fund, the world bank and the WTO B. The WTO, the world bank and the farm bill C. The farm bill, the international monetary fund and the world bank D. None of the above - correct answer ✔✔D What describes the safety net in farm policy? A. The government providing ad hoc assistance when disasters occur. B. The policy tools that are put in place by various farms bills. C. The iron triangle D. None of the above - correct answer ✔✔B Once a new program has been adopted, it has tended to exist for a number of years with only minor modifications in how it is implemented. There are three primary reasons for this: - correct answer ✔✔1. can change farm operations which could be costly

2. affect level of income and land value
3. fear of the unknown