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APR: Winter 2018 Articles

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The “Stover Availability versus Supply” Puzzle and Contracting Options for Cellulosic Biomass

Chao Li, Dermot Hayes (dhayes@gmail.com), and Keri Jacobs (kljacobs@iastate.edu)
The existing US Renewable Fuel Standard (RFS) makes commercial-scale cellulosic ethanol a priority, calling for 16 billion gallons of cellulosic biofuel production by 2022, sourced from grasses, trees, agricultural residues, and municipal waste. The US Department of Energy “US Billion-Ton Update” study suggests that to meet the mandates in the RFS, approximately 66 million tons of corn stover may be needed annually. This equates to nearly 50 percent of the total annual stover produced by Illinois, Iowa, Minnesota, and Nebraska.

Relational Contracts and the Diffusion of Agricultural Technologies in Brazil

Guilherme DePaula (gdepaula@iastate.edu)
What is the role of the private sector in scaling agricultural technologies in developing countries? The Brazilian experience, with the soybean boom in the savanna and the expansion of the safrinha corn, suggests that the private sector can play a central role in technology diffusion, even in locations where credit and output markets do not function well.

USDA’s Projections for 2018

Lee Schulz (lschulz@iastate.edu) and Chad Hart (chart@iastate.edu)
US agriculture continues on an amazing productivity run. The last five corn crops are the five largest ever produced. The last four soybean crops are the four largest ever. Meat production exceeded the $100 billion mark for the first time. The question going forward for the markets is, “Will this streak continue next year?” USDA has provided its outlook for 2018 and the answer seems to be “Yes.”

Can China’s Rural Land Policy Reforms Solve its Farmland Dilemma?

Minghao Li (minghao@iastate.edu), Wendong Zhang (wdzhang@iastate.edu), and Dermot Hayes (dhayes@iastate.edu)
The scarcity of arable land is a defining feature of Chinese agriculture. In 2015, China fed 18.9 percent of the world’s population with only 8.5 percent of the world’s arable land. Furthermore, the limited agricultural land resource in China is distributed to 231 million households, resulting in an average farm size of only 0.96 acres per household, and even such small farms are usually scattered in several separate plots. Therefore, China faces two challenges: (a) preserving the quantity and quality of its arable land amid rapid urbanization; and, (b) consolidating land to increase agricultural productivity. China’s recent rural land reforms on these two aspects have implications not only for China, but the entire world.

Is ARC-CO acting as a Safety Net Program? Evidence from Iowa

Alejandro Plastina (plastina@iastate.edu) and Chad Hart (chart@iastate.edu)
The Agricultural Act of 2014, referred to as the 2014 Farm Bill, is the legislative backbone of federal farm income support programs and agricultural disaster assistance programs. These programs, combined with federal crop insurance, are what is typically referred to as the farm safety net. As the debate has begun for the next version of the Farm Bill, policy discussions have centered on improving the effectiveness of the safety net. However, in previous Farm Bills, there had been a concerted effort to utilize decoupled agricultural support to ensure that US farm programs would meet World Trade Organization (WTO) standards. The commodity programs in the 1996 and 2002 Farm Bills were led by the direct payment programs—essentially fixed decoupled payments that flowed to agricultural producers, regardless of the agricultural economy. In the 2008 and 2014 Farm Bills, commodity programs were modified to react to conditions in the agricultural economy. Congress must determine how to balance decoupled agricultural programs, which are less responsive to the agricultural economy but more accepted in the WTO, against safety net agricultural programs, which are more responsive but also seen as more trade distorting.