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Abstract
Potential adjustments in U.S. commodity program for rice are evaluated in this paper using stochastic
analysis in a global modeling framework. Corresponding threshold and loss-compensatory increases
in target price and loan rates are determined with assumed outright and gradual elimination of direct
payments. Results show that if direct payments (DP) are eliminated in 2012, a 23% increase in both
the target price (TP) and loan rate (LR) triggers counter-cyclical payments (CCP) 80% of the time;
and it will take an increase of 48% in TP and LR to generate CCP enough to compensate for the loss
in total DP. If DP is gradually removed over 5 years, the trigger and compensatory increases in TP
and LR are 41% and 46%, respectively. Furthermore, if DP is eliminated outright and TP maintained,
an increase of 71% in LR triggers loan deficiency payments (LDP) 75% of the time; and it will take
an increase of 130% in LR to generate enough LDP to recoup the total loss in DP. Under gradual
removal of DP, the trigger and compensatory increases in LR are 71% and 92%, respectively.