Managing Farm Resources in the Era of the 1996 Farm Act

The 1996 Farm Act quickly and dramatically changed the decisionmalcing environment for farmland operators, owners, and managers. In response to the uncertainties as to how the Farm Act would affect the management of the Nation's farm resources, eight State and area-specific panels of professional farm managers and farm operators were held during the first part of 1997. Panelists participated in discussions that focused on changes in the management of farm resources, forces driving these changes, the current economic and financial setting for farming, characteristics of farm leases, land values, commodity price expectations, expected crop mixes, management of production and marketing risks, and general prospects for agriculture in their areas. This staff report includes information and perspectives provided by these panel discussions. Four topics highlighted by the panel discussions have special relevance to prospective management decisions in the U.S. farming sector into the 21st century. Consequently, they have major implications for sector monitoring and analytical activities. The four topics include: • The Production Flexibility Contract Payments (PFCPs) and the associated elimination of most planting restrictions, • Capitalization of PFCPs into land values and land rental rates, • Direct and indirect effects of PFCPs on farm management decisions, and • Marketing and managing price risk