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Abstract

The Farm Security and Rural Investment Act of 2002 (2002 Farm Act) was enacted in the United States in May of 2002. While this new farm law introduced some new policies to the array of agricultural commodity programs, in many ways the 2002 farm act extended provisions of the 1996 farm act and institutionalized provisions of ad hoc emergency spending bills of 1998-2001. Three key commodity program features of the 2002 farm act are marketing assistance loans, counter-cyclical payments, and direct payments. Marketing assistance loans existed under previous U.S. farm law, direct payments replaced production flexibility contract payments of the 1996 farm act, and counter-cyclical payments are intended to institutionalize the market loss assistance payments of the past several years. This paper discusses these U.S. farm programs and some of their potential impacts on agricultural markets. An overview of these programs features is first presented, along with an illustration of a con farm's sources of revenues under the new farm act. Then a discussion of some of the impacts of the 2002 farm act is given, commenting on the FAPRI analysis presented by John Kruse. Additional potential impacts of marketing loan provisions of the new law are then discussed, followed by some general comments on potential impacts of counter-cyclical payments, direct payments, and selected additional provisions of the legislation.

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