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Federal Reserve Dank of Chicago - -

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January 17, 1964

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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

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,

,

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.

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