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A kit . Federal Reserve Dank of Chicago - - 0 January 17, 1964 rai ,„ 4 t 1CULTUR ta:R1CU1TURAL 1113 FEED GRAINS will be covered by a volunterP1 ro-' gram in 1964 that is similar to the 1963 prOgratEl u acrea several important differences. The maxi-mm that may be idled this year is larger than east yearft 84 rate of payment per acre idled has been Increased; a limit has been placed on the size of payments per acre• the proportion of the total support price assigned t6 of its components has been altered, and the base period used to calculate "normal" yields has been 6xpanded.Idling of at least 20 per cent of the corn, barley and grain sorghum base acreage is again required for eligibility for price support and diversion payments. The maximum acreage that can be idled, however, has been raised to 50 per cent of the 1959-60 base from 40 per cent in 1963. Payment rates per acre idled in excess of 40 per cent of the base acreage will be substantially higher on the average. Payments for idled acreage will be based upon the normal yield for the farm as well as the support prices and percentage of the feed grain base that is diverted to conservation use. The first 20 per cent of the acreage idled will receive payments at the rate of onefifth of the total support prices on the normal production of the diverted acres. Farmers who idle additional acreage ranging from 20 to 40 per cent of their base will receive payment on these additional acres at a rate onehalf of the total support price times the farm's normal production per acre. Payment for this additional diversion will be added to the payment for the minimum 20 per cent idled. Farmers who idle more than 40 per cent of their base acreage (up to the maximum 50 per cent, or 25 acres if this is more than half of the base acreage) will receive payments at a rate of one-half of the support price on the entire acreage diverted. Of course, compensatory payments will be reduced as additional acreage is idled, and payments will not be made on more acres than are included in the base. A limit of 20 per cent of the value of the cropland idled has been placed on diversion payments by a new provision of the law. This restriction may reduce the payments to some farms, particularly those that idle the maximum 50 per cent of their base. With the exception of the latter, these changes in the acreage diversion provisions were apparently effected to encourage producers to divert additional feed grain acreage. supports for corn, barley and grain sorghum • will Price be provided in two parts again this year: support loans _and compensatory payments. The compensatory payment will be somewhat lower but a slightly larger proportion of the total support will be available in the form r 1.94 Number 735 ,of loans. The total support price to farmers participating in the program will remain the same as in 1963. For example, the total support price for corn of $1.25 will consist of a compensatory payment of 15 cents and a support loan of $1.10. In 1963, the comparable figures were 18 cents and $1.07, respectively. Yields for 1961 and 1962 will be averaged with the 1959 and 1960 yields to determine "normal" production. A two-.year average-1959 and 1960—was used in the previous feed grain program. The expanded base should result in a higher average normal yield—used in calculating the acreage diversion payment—for most Midwest farms. The average increase in the normal yield in Illinois should be about six bushels per acre, thus slightly higher payments on idled acreages are likely. Comparative Returns in 1964 Feed Grain Program ("typical" Illinois corn farmer with 100 acre base) Acres Diverted Harvested Yield (bu.) Actual "Normal" Gross Income Crop ($1.10) Payments : Diversion Compensatory Total gross Nonpartia cipation 100 85 $9,350 $9.350 Cost reduction ($20 per acre) Comparative return $9,350 20 80 Participation 30 40 70 60 50 50 87 75 88 75 89 75 90 75 $7,656 $6.776 $5,874 $4,950 375 900 844 788 1.875 675 2,343 563 $8.931 $8.408 $8,424 $7,856 400 600 800 1,000 $9,331 $9,008 $9,224 $8,856 This example of a "typical" Illinois corn farmer indicates that it's about a toss-up whether or not to participate in the program. Other factors, of course, must be considered such as the relative size of base acreage, actual versus "normal" yield per acre, overall fertility of the farm, available labor and machinery and the degree of weather risk for the individual farm. Roby L. Sloan Agricultural Economist FARM BUSINESS CONDITIONS NOVEMBER 1963, WITH COMPARISONS . , , ITEMS 1963 November , . 1962 - October . November 101 105 PRICES: Received by farmers (1957-59.100)•...... •......,.., Paid by farmers (1957 59.100),.,.,•..• ,....„„„.,. Parity price ratio (1910-14.100)..•..........,, e ..,, a , Wholesale, all commodities (1957-59.100) ........,..,.., Paid by consumers (1957-59.100).•....... Wheat, No. 2'red winter, Chicago(dol. per bu.).....ea Corn, No.2 yells, Chicago (dol. per bu.)................ Oats, No.2 white, Chicago(dol. per bu.) ......•..... a Soybeans, No. I yellow, Chicago (dol. per bu.) .......... Hogs, barrows and gilts, Chicago (dol. per cwt.).......„,., ., Beef steers, choice grade, Chicago (dol. per cwt.). . • . . .• .... . . ...... S. (dol. per cwt.) . wholesale, U. Milk, ... . ... . .. . . S. (dol. per lb.) markets, U. local Butterfat, Chickens, local markets, U.S.(dol. per lb.)..............• Eggs, local markets, U. S.(dol. per doz.) ..............Milk cows, U. S.(dol. per head)...................... • Farm labor, U.S.(dol. per week without board)............. Factory labor, U. S.(dol. earned per week) .• ....•...... 101.09 100.53 97.36 PRODUCTION: Industrial, physical volume (1957-59.100) ...........,.., Farm marketings, physical volume (1947-49.100)........... 127 127 120 183 205 186. INCOME PAYMENTS: Total personal income, U. S.(annual rate, bil. of dol.)... Cash farm income, U. S. 1 (annual rate, bil. of dol.) 14-73 471 14-50 39 100 100 106 77 is% 77 101 107 2.17 1.17 0.70 2.79 14.85 23.51 4.47 0.58 0.111. 0.36 210 101 107 2.15 1.24. 0.71 2.78 15.65 24.03 . as 80 101 106 2.10 1.10 0.72 2.50 16.79 30.13 14..1+2 14.1.1.0 0.58 0.13 0.36 213 0.59 0.14 0.37 218 an as 75 l a . , EMPLOYMENT: Farm (millions) Nonagricultural (millions) FINANCIAL (District member banks):* Demand deposits: Agricultural banks (1957-59.100) ..• •..•.•.• Nonagricultural banks (1957-59.100) ........... Time deposits: Agricultural banks (1957-59.1001 .....•.• • • •..• •...• • Nonagricultural banks (1957-59.100) • • • • - • • • • • • • • • • • • • ..I. NO 114 614-.5 5.1464.5 4.8 4.9 63.1 , 11.14- 1114- 106 103 1614177 163 176 , - 111 101+ 145 153 1Based on estimated monthly income. ... Compiled from official sources by the Research Department, Federal Reserve Bank of Chicago. •